Reality bites
Bitcoin boom leads to a jump in cryptocurrency crime
THE rising price of Bitcoin has been met with a surge in cryptocurrency crime as reports of related fraud tripled in 2017.
Action Fraud, the UK’S national fraud and cyber crime reporting agency, said crimes linked to Bitcoin increased to 999 in 2017, compared to 320 in the previous year. It came in a year in which the cryptocurrency’s price rose from under $1,000 (£705) to nearly $20,000 in December.
The figures exclude cyber crimes such as the Wannacry ransomware attack that hit the NHS but include investment fraud and extortion. The rise in Bitcoin exploitation by criminals mirrored the increasing public interest in it, with reports peaking last December at 167 compared to 41 in the same month the previous year.
The crimes included victims parting with their money in supposed investments through malicious adverts online or losing money to fraudulent social media campaigns.
The average investment fraud victim lost £13,500, according to Action Fraud. “Once the price of Bitcoin started to surge in mid to late 2017 we started seeing massive increases in the number of frauds,” an Action Fraud spokesman said. “These new investment scams are exploiting a lack of general understanding about Bitcoin, and it being the flavour of the month, to make money before moving on to the next investment craze.”
Over the last two years there were a further 1,206 Bitcoin cyber crimes reported, such as traditional ransomware attacks and hacking.
Dozens of other new digital currencies created in the wake of Bitcoin’s success have been accused of acting like Ponzi schemes, while millions of dollars have been stolen in overseas hacks of cryptocurrency wallets as Bitcoin’s popularity and price make it a target for digital heists.
At the World Economic Forum in Davos, Prime Minister Theresa May said the UK was looking at a crackdown on cryptocurrency crime. “Cryptocurrencies like Bitcoin, we should be looking at these very seriously, precisely because of the way they can be used, particularly by criminals,” she told Bloomberg.
Bitcoin only exists online and is highly anonymised, making it difficult to identify users and track payments. It has long been seen as the preferred currency of drug dealers, cyber criminals and online ransomware demands, such as last year’s Wannacry cyber attack. Bitcoin’s price jumped from around $1,000 in January last year to almost $20,000 at its peak. The price is now around $10,000.