The latest CipherTrace report into cybercrime has revealed that much of the USD 1.7 billion worth of cryptocurrency stolen in 2018 came from the Asian Bitcoin arena of Japan and South Korea.

In the “Cryptocurrency Anti-Money Laundering Report, 2018 Q4”, it is stated that out of the funds either stolen through hack or scams, about USD 950 million came from cyber attacks on Bitcoin exchanges. The remainder came from a range of criminal activity such as ICO exit scams, Ponzi schemes, and mobile phone sim swaps.

Last year started badly in Asia, with Tokyo-based Coincheck’s USD 500 million hack, followed by Bithumb and Zaif then falling foul to hacking. With numbers on the increase, representing a seven-times hike over a period of two years since 2016, the report expresses the need for tighter regulation. Investors in Vietnam also lost about USD 35 million to the Sky Mining scam in 2018, adding to Asia’s woes.

Both South Korea and Japan have since made a concerted effort to tighten security, with both countries now introducing self-regulation. Japan’s cryptocurrency industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA), was approved by the national Financial Services Agency (FSA) to be officially recognized in its regulatory position late in 2018. This was a direct result of the Coincheck hack of the same year.

South Korea, after its CoinRail hack in June last year, has joined other Asian nations who are currently in the process of regulating their own financial banking strategies regarding blockchain and cryptocurrency in order to protect exchange clients.

The report, in indicating the need for closer regulation, suggested that bone fide operators need to be able to operate untarnished by “bad actors” who are not part of the legitimate cryptocurrency community. The report stated:

“These bad actors are clearly flocking to jurisdictions with weak AML and Know Your Customer (KYC) regimes, because in our Q3 report we published the results of research showing 97% of criminal Bitcoin flows into unregulated cryptocurrency exchanges.”

 

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