According to The Financial Action Task Force, although virtual assets potential benefits, “without proper regulation, they risk becoming a virtual safe haven for the financial transactions of criminals and terrorists.” In fact, crypto assets are been used to ask ransom, to money laundering, and to undercover criminal activity. According to CipherTrace, only in 2019, “losses from fraud, misappropriation of funds, exchange hacks and thefts add up to US$4.5 billion. Of these US$370 million were lost to thefts and hacks.”
According to CipherTrace, from 2018 to 2019, crypto-assets losses “due to fraud and misappropriation increased by 533%”. The FATF outlines that only the ‘Wannacry’ ransomware attack in 2017 cost at least “USD 8 billion in damages to hospitals, banks, and businesses across the world,” this damage is far beyond the USD 100 million asked in bitcoin ransom.
Crypto assets are laundered to hide rising ransomware attacks and other criminal activity. Chainalysis report that USD 2.8 billion was laundered in 2019 only with crypto assets. Not only viruses are infecting thousands of computer systems that are kept hostage until the victims paid hackers a ransom in crypto assets. Blockchain currencies are vulnerable to Sybil attack that in one single case 25,000 bitcoins were stolen in 2011.
Some countries are taxing those assets as regular high-risk investments, requesting investment banks, and stock-brokers to verify the identity of clients. Adding to already mentioned issues Institute for Research on the Internet and Society alert that “representations of value operated on the crypto platforms are not currencies neither from an economic standpoint nor from a legal one.” Therefore, investments in this type of asset cannot be considered a safe investment.
Authorities enforcements to track crypto transactions are legitimate and necessary to avoid its use to undercover criminal activities. Fighting against money laundering, and terrorism financing, making the world a safer place.