Matthew Rosenquist breaks down three cybersecurity lessons from crypto's 2020 boom. Scams and thefts hit record scale, with incidents like Bitconnect and KuCoin stealing hundreds of millions. Law enforcement is getting better at tracking and seizing crypto assets. The market exploded from $193 billion to $741 billion in a year, making exchanges and wallets prime targets for hackers and nation-states.
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As 2020 comes to a close, we can reflect back on some of the important cybersecurity lessons that are intertwined with the rapidly growing digital cryptocurrency economy. So let's talk about the top 3 lessons. And the first one here is really about digital currency, and it allows for much bigger scams and crimes. Now, Crypto Core Hacking— this was a group and it stole over $200 million in cryptocurrency from various exchanges. Uh, Altspit, which is an Italian exchange, it was attacked and subsequently closed. And the coins that were stolen for there, well, today's figures are over— worth— are worth over $200 million. Uh, KuCoin was a big hack and they were you know, just soaked for about $150 million in their cryptocurrency. And the BTC-e— this is actually an owner of, uh, a money laundering, um, mixing service, right? He was arrested, and it was estimated that he had actually laundered over $90 million. And we can't forget that one of the, the biggest scams of all time, the Bitconnect scam, which raked in over $2.5 billion, it impacted, victimized over 1.5 million people. I mean, that's just huge, huge, right? Um, and you know what jumps out at you? And when we look at all these numbers and figures, is it the tens to hundreds of millions of dollars in losses? I mean, this is not normal theft or fraud. The benefits of digital technology in the fact that it connects everyone everywhere just about can also be used by the bad guys to target just about everyone everywhere. And that makes the scope of fraudulent activities much, much larger. So the number of people that can be impacted are greater, and the collective amount that can be fleeced from the community also goes up. Goes up significantly. Okay, second lesson we learned coming out of, uh, 2020: law enforcement, they're improving, and now they can seize huge sums of cryptocurrency from the criminals and even arrest those behind the big scams. And here's some interesting examples, right? Uh, with the Helix Bitcoin mixing service, the owner was arrested, and this was again money laundering operation $300 million. Chinese authorities, they arrested over 100 people involved in an infamous investment scam called PlusToken, and they were able to seize $4 billion in cryptocurrency. And that was just a couple of months ago. And because the market has gone up so much, right now that's worth over $6 billion as they disposition that. So that's huge. And on this side of the world, the US DOJ, Department of Justice, they just seized earlier this year about $1 billion at the time, and this was several months ago, of Bitcoin from a shutdown Silk Road marketplace. It was a dark web marketplace years ago that was shut down, and they finally got kind of the last bit of cryptocurrency that was being hidden away by, well, someone that hacked the hacker.. And even though that was worth a billion dollars earlier this year, as of right now that's coming up on $2 billion simply because of the appreciation of the cryptocurrency market and the value of those coins. So these are huge numbers, huge numbers. Um, back over in Europe, the Ukraine, their law enforcement, they arrested an entire gang, right, that laundered over $42 million million dollars from ransomware groups. So they were servicing the hacker community and helping get through that money and hide that money from the ransomware crews. Now, Ruja, and she's known as the Crypto Queen for OneCoin, and OneCoin was just a massive, massive investment scam, a crypto investment scam, right? And law enforcement, they're still looking for her, and she can't hide forever. Well, unless she's no longer alive, which may actually be the case. Case in this. She made a lot of people very unhappy, um, but that scam pulled in $4 billion. Again, massive, massive numbers. But the thing here to note is that overall, law enforcement around the globe, they're getting significantly better at investigating and prosecuting cyber criminals, right, that are focusing on cryptocurrency. Now they're still far from efficient, but they have made great strides in making arrests and seizing those crypto assets from the criminals. Okay, lastly, the third lesson here, right? The growth of cryptocurrency is earning more attention from the cybercriminals, right? In the cryptocurrency market, right, the capitalization for the entire market grew from about $193 billion in the beginning of 2019, and it's sitting at right now just over $741 billion as we, uh, come to the end of 2020. That's a massive amount of growth, and we saw it just in the coins that were seized by law enforcement, how the valuation just in a few months skyrocketed, right? Uh, doubling in some cases. Now, we have to apply the cybersecurity principle called the Willie Sutton Principle, and we use this in cybersecurity all the time. And for those of you who don't know, Willie, right, sometimes called Slick Willie or Willie the Actor, he was a famous US bank robber, and he robbed banks for about 40 years and spent most of his life in prison in between robbing banks. And he was, famously misquoted when a reporter asked him, you know, Willie, why do you rob banks? And, you know, he replied— and again, it was a misquote, but it stuck— you know, that, that, that's where the money is. And that makes so much sense. I mean, the truth of that continues to resonate, right? Wherever there is value, criminals are not far behind. Therefore, as cryptocurrency grows, The value increases, and so does the risk from criminals. In so many ways, crypto makes for a good target, and this is not lost on the cyber criminals. They see it as a big opportunity, and we can see from the numbers that they're proving that to be very true. So here's my prediction, right? And you can take this to the bank. Moving into 2021 and beyond, cryptocurrency exchanges, crypto investments, crypto wallets, and users of cryptocurrency will be prime targets for extortionists, thieves, fraudsters, scam artists, top-tier hackers, even some nation-state hackers that are looking for hard currency. They're coming after, right, the crypto community. They're coming after them. The value is there and it makes a lot of sense, and it's not as difficult as hacking other things, unfortunately. So we will see a continued rise in attacks against the community using cryptocurrency. Cybercrime will grow alongside at the same or even a greater pace as the advancement of crypto. So there you have it, the top 3 lessons for cybersecurity and crypto: bigger crimes, better law enforcement, um, from a capability perspective, right? And a greater commitment by the criminals to commit more crimes targeting even small and medium businesses and even individual consumers. They're going to go after Everyone. So stay sharp in 2021. Be on the lookout for fraud and aggressively protect your crypto assets with the very best tools and processes.
