(For a time, I was a contributing writer for a website that focused on blockchain technology and cryptocurrencies. As that website draws to a close, allow me to share one of the pieces which I wrote for the site, my crypto swan song if you will. This is an abridged version due to space limitation.)
Blockchain security expert CipherTrace just released its cryptocurrency anti-money laundering report for the first quarter of 2019 and things do not exactly look rosy. Illegal activities involving cryptocurrencies have increased exponentially as criminals and rogue regimes become even more sophisticated with their schemes. As these threats continue to plague the crypto community, authorities are scrambling to beef up regulations as viable preventive and punitive measures.
Theft, scams, fraud
Most of the cryptocurrency losses are attributed to iniquitous schemes. According to the report, an estimated US$1 billion were lost to left, scams, and fraud in the first quarter of 2019 alone. CipherTrace says that cybercriminals continue to develop “ingenious new techniques to drain millions more from user accounts and wallets.” All they have to do is to look for countries with lax rules on cryptocurrencies so it would be easy to infiltrate exchanges and infrastructures given their vulnerability.
Some regimes see cryptocurrencies as the way to get around tough international sanctions. North Korea could well be the posterchild for this. According to a report released by the UN Security Council early March of this year, North Korean hackers breached five cryptocurrency exchanges in Asia between January 2017 and September 2018 which resulted to US$571 million in losses. North Korea continues to deny such attacks.
The Philippines is not immune to the dark side of cryptocurrencies. Channel News Asia recently reported about the proliferation of online streaming of child abuse in Southeast Asia with sexual predators using cryptocurrencies as payment and file sharing done on an autonomous peer-to-peer network.
In response to these illicit activities, more and more countries are expected to pass stricter regulations. CipherTrace’s report put it succinctly when it said that “a tsunami of tough new global anti-money laundering (AML) and counter-terror financing (CTF) regulations will roll over the crypto landscape in the coming year.”
Yes, there are innate advantages of an autonomous network and the use of cryptocurrencies but it cannot be denied that their control-less nature makes them particularly vulnerable to a whole host of criminal activities. Cliche as it may sound, with great power comes great responsibility so if the world wants a crypto-friendly future, it might just necessitate a certain degree of regulations.