Crypto Investigators CipherTrace: Crooks Stole $350 Million in Q1 2019

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On May 1st, cryptocurrency analysis firm CipherTrace released their anti-money laundering (AML) report for Q1 2019. Therein, the investigatory specialists said they had already tracked thefts of more than $350 million USD worth of crypto in the first quarter of the year.

That significant sum puts the cryptocurrency ecosystem on course for seeing more than $1 billion in thefts by the end of 2019. For comparison, the market capitalization of the entire cryptoeconomy was $176 billion at press time, with $94 billion and $17 billion of that market cap being attributable to bitcoin (BTC) and ether (ETH) respectively.


CipherTrace considered the QuadrigaCX debacle — in which users of the Canadian exchange saw as much as $195 million worth of crypto collectively lost, seemingly permanently — as part of the thefts that had occurred so far this year.

Of course, that position is very much so in line with the dominant theory that’s taken shape around the episode, namely that elements of Quadriga’s leadership conducted an exit scam with their customers’ funds.

The cryptocurrency analysis firm also highlighted the fresh Bitfinex and Tether scandal that began this month after the office of the New York Attorney General’s (NY AG) declared that the duo’s operators had engaged in fraud regarding the loss of more than $850 million in customer deposits.

What’s Trending?

Taking theft and fraud incidences together, then, CipherTrace asserted in their latest AML report that at least $1.2 billion worth of crypto had been misappropriated in Q1 2019. The firm said that projection was a conservative estimate, as their analyses would undoubtedly have missed considerable amounts of illicit, and better hidden, activity.

As for how the first quarter of this year measured up against last year’s first quarter, CipherTrace’s report noted that fraud and extortion were trending in the cryptoeconomy:

“The previous year’s crypto crime spree was dominated by major external exchange hacks around the globe—with the biggest occurring in Q1 2018. However, in the first quarter of this year, insiders, extortionists and scammers attempted a more diverse range of crypto crimes. As just one example, kidnappers in Norway demanded nine million euros (approximately US$10.3 million) ransom in Monero, a privacy coin, for a billionaire’s wife, who has not yet been returned.”

Zooming out, the cryptocurrency analysts also deduced that there had been a surge in the amount of bitcoin transactions being sent from U.S. cryptocurrency platforms to offshore exchanges in the 12 months prior to January 2019.

The firm also noted a tangible uptick in the amount of bodies and regulators around the globe that had begun actively working on directly regulating the cryptoeconomy, e.g. via intensified AML and Know Your Customer (KYC) rules.

CipherTrace highlighted that the “wave” of coming crypto regulations might eventually lead to privacy coin bans, as was proposed by a French government report earlier this year:

“In light of the huge losses suffered by users of QuadrigaCX, regulators in Canada and around the world are rethinking controls on the internal business practices and security operations of exchanges. In addition, regulators are beginning to recommend bans on privacy coins, as criminals are coming to prefer these new anonymous altcoins to bitcoin because they are more difficult to trace.”

CipherTrace Ascending

Crypto crime may be on the rise, and so is CipherTrace’s profile in kind.

Last month, the firm announced it had partnered with cryptocurrency exchange powerhouse Binance in order to further optimize the enterprise’s AML infrastructure.

CipherTrace’s CEO Dave Jevans was also recently qualified by a Canadian court as being Canada’s first bitcoin expert witness. The designation came after Jevans was called to provide expert analysis in a dark web marketplace case.

The crypto sleuths notably raised $15 million in venture funding back in February.

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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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