Posted In:

Crypto, DeFi, Breaking Bad


#273
Crypto Criminals

Published:

Feb 02, 2019


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Posted In:

Crypto, DeFi, Breaking Bad

Published:

Feb 02, 2019


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Reports published by Chainalysis and CipherTrace this week demonstrated that security remains a critical concern in crypto. Despite crypto prices falling dramatically in 2018, stolen crypto surged by more than 400% to $1.7b.

Roughly 57% of losses were comprised of thefts from exchanges and wallets, with the remaining 43% comprised of "exit scams" such as fraudulent ICOs or Ponzi schemes.

And despite the infamous shutdown of the Silk Road in 2013, Darknet Activity has continued to climb in recent years – with authorities losing a constant game of whack-a-mole. In 2018, $603m worth of bitcoin were used to trade illicit goods and services - with activity late in the year matching peak levels from early 2017.

So as the technology and regulation mature, why does it remain so difficult to crack down on the crypto criminals?

One key reason is the lack of coordination across exchanges on a KYC (“know your customer”) regime – with many international exchanges remaining unregulated. According to CipherTrade, 97 percent of criminal bitcoin flows through unregulated cryptocurrency exchanges.

Lest we believe that crypto has a unique problem, KYC is a core issue across digital financial services. In an interesting non-crypto example, the smash hit game Fortnite recently came under fire for rampant credit card fraud related to in-game purchases.

So while KYC isn't uniquely a crypto issue, crypto has unfortunately remained a useful tool for criminals to move money and avoid this iconic problem faced in Breaking Bad

Portfolio News


The Hard Fork weekly commentary: stablecoin on-chain volume on the rise despite crypto bear market - Portfolio company TradeBlock reports that the transaction volume on the top four digital stablecoins (based on on-chain volume) is now averaging $116m per day, nearly 75% of the transactional volume of the $158m done through Venmo. Read more

Crypto Criminals


Cryptocurrency thefts, scams hit $1.7b in 2018: report - Cryptocurrencies stolen from exchanges and scammed from investors surged more than 400% in 2018 to around $1.7b, according to a report from CipherTrace. Read more

Two groups account for $1b in cryptocurrency hacks, new report says- Two groups of highly sophisticated cyber criminals have likely stolen $1b+ in cryptocurrency hacks. Alpha group is “a giant, tightly controlled organization at least partly driven by nonmonetary goals,” and Beta group is “heavily sanctioned organization absolutely focused on the money!” Read more

Industry News


Venmo is finally venmo-ing big revenue to its less cool parent - Six years after being acquired by PayPal, the cherished app of millennials is finally generating solid revenue for its larger, older, less cool parent company. Within a few quarters, it may even break even, according to PayPal CFO John Rainey. Read more

Visa and Mastercard still want to enter China, but China isn’t cooperating - Visa and Mastercard share a common frustration: neither is doing business in China more than a year after both companies submitted applications (paywall) to process renminbi payments, the Chinese central bank has yet to acknowledge and formally accept their applications. Read more

Genesis Capital has originated over $1b in crypto loans - Despite the reign of bear market, New York crypto market maker has originated over $1b in loans in under 10 months, doubling originations in Q4 alone. Read more

Fidelity is said to plan March launch of Bitcoin custody - The Boston-based firm, who has long been a proponent of digital assets, even mining BTC back in 2015, is launching its BTC custody to a subset of its 13k financial institutional clients as other large custodian players such as Bank of New York Mellon, JP Morgan, and Northern Trust continue exploring the field. Read more

Fintech companies raised a record $39.6b in 2018 - VC backed financial technology companies raised a record $39.57B from investors in 2018. The surge in funding was due in large part to 52 mega-rounds, or investments larger than $100 million, which were worth $24.88 billion combined. Read more

China to rush through new foreign investment law - China's new law formally bans "forced" technology transfers and other illegal interference by government officials in the operations of foreign-invested enterprises. Beijing hopes the new law will smooth over trade talks with Washington. Read more

The death of the fund — and what comes next - Joshua Levin, co-founder of OpenInvest, writes a piece for InvestmentNews about why he thinks mutual funds and ETFs are on the way out. With 80% of investors caring about sustainable investments that are tailored to their interests, he believes the future is about DCIs (dynamic customer indices). Read more

Financings


Acorns - California based investing and savings app has raised $105m in Series E funding from Comcast Ventures, NBCUniversal, Bain Capital, BlackRock, TPG's Rise Fund, and DST. The valuation on the round is $860m, topping Betterment's $700m valuation. Read more

Petal - New York based credit card issuer has raised a $30m Series B led by insider Valar Ventures, with participation of Greyhound Ventures. Read more

Symbiont -New York based distributed ledger and smart contract platform for capital markets has raised $20m in funding led by Nasdaq Ventures, with participation from Citi and Galaxy Digital. Read more

Stripe - San Francisco payment processor API has raised an additional $100 million from Tiger Global, boosting its valuation to $22.5 billion.


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