Investors globally lost cryptocurrencies worth $1.2 billion to stealing across the exchanges in the last two years, New Telegraph has learnt.
This came as theft of the virtual currencies continue to grow over the various trading platforms.
According to latest report by a United States Department of Homeland Security funded cyrptocurrency security company, CipherTrace, the phenomenal growth in the value of cryptocurrencies such as Bitcoin over recent years, has attracted investors, speculators, and thieves.
The study also suggested that the figure of stolen cryptocurrencies in the first of this year might be three-fold what was stolen in the entire 2017.
KureCoin, a Nigerian cryptocurrency platform had recently put Nigerian’s investments in global virtual currency market at over $5 million. Nigerians, according to KureCoin, are also among the early adopters of cytocurrencies and have been contributing to the increasing capitalisation of the market. This, however, is in spite of repeated warnings by the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) against investments in the unregulated market driven by blockchain technology.
Explaining how cryptocurries thefts occur, CipherTrace noted, “criminals are often early adopters of new technologies” and they always find ways to compromise any system.
“So not surprisingly Bitcoin and other virtual currencies attracted their interest because of several unique properties. Crypto transactions do not require criminals to use their real names, bank account numbers, etc., which can enable them to evade the watchful eye of law enforcement and other investigators. Instead, they can use pseudonyms; and transferring crypto funds does not require banks for other financial intermediaries, e.g., PayPal. Moreover, unlike robbing a bank, thieves can raid cryptocurrency exchanges with little fear of being caught.”
The rapid growth in the theft of virtual currencies and their use for illicit purposes, are now attracting the attention of regulators globally according to CipherTrace.
“Government agencies around the world are concerned not only about the impact that theft and extortion has on individuals and business but also how it drives an increase in money laundering,” the report stated.
“This is because once cryptocurrency is stolen from an exchange, received as ransom or acquired through other illegal activity, the cybercriminals need to get it into Blockchain system, somehow cleanse it, and then get it out for their use in the real world.”
Cryptocurrencies have been banned in some countries such as China, Bangladesh, Morocco and India among others. However, rather than outright ban, some countries such as Japan, Korea , Russia, Sweden and others have put in place regulations to guide the virtual currency market while a few other countries are also in the process of developing regulatory frameworks.
In Nigeria, the government has been indifferent but with warnings to citizens against investing in the market. Meanwhile, amidst calls on the CBN to come up with regulatory framework for cryptocurrencies as Nigerians are already investing, technology experts in the country have urged the government to look beyond the cryptocurrencies and its flaws and embrace the blockchain technology powering it, adding that the governments in developed countries are already using the technology to achieve efficiency.
According to the Chief Executive Officer of Jidaw Systems, Mr Jide Awe, blockchain technology has a lot of uses beyond cryptocurrencies. “Blockchain technology is not used in the financial system alone, it is used in many areas because it is transparent, secure and has ability to give you independence. This can be applied in many areas of development in Nigeria”, he said.
Chief Executive Officer of Kure Holdings, Mr Tega Abikure, had also recently told this newspaper that adoption of the blockchain technology in Nigeria could help the country put an end to tax and election frauds. “It is completely transparent and cannot be changed; it can be used to create a decentralised system of payment where the tax payer had an unhindered access to the collector, which is the government. It enhances revenue collection and removes the challenges of remittances, everything becomes easy when it is brought to the blockchain infrastructure,” he said.
Besides, he said the technology addresses complexities in governance and administrative systems, as it is essentially a decentralised transaction ledger in which digital information can be distributed and viewed but not copied or altered.