3 key messages:
* Cryptocurrencies and blockchains are safer than legacy payment networks, contrary to popular belief.
* Gartner projects that successful ransomware and cryptocurrency thefts will decline by 30% in the next three-years.
* This positive trend is due to four key factors: transparency, emerging intelligence market, government’s involvement, virtual asset services providers responsibility
Contrary to common belief, cryptocurrency is not an anonymous crime haven. Smart analytics solution can make it easier to track assets on blockchains than on legacy payment networks. However, this is despite the fact that they might take a more complicated route. It’s difficult to determine the identities of criminals who use different blockchain addresses to transfer their funds. This is especially true if they are using self-hosted wallets. Gartner recent released « Predicts 2022″ predicts that ransomware and successful crypto thefts will fall by 30% as criminals are unable to transfer and spend money on blockchain networks.
This is due to four developments.
BLOCKCHAINS HAVE A HIGHER TRANSPARENCY THAN FLAT PAYMENTNETWORKS. Transparent blockchains make it easier to trace criminal payments. This means that effective anti-blockchain-fraud systems must integrate with just 23 totally transparent platforms rather than thousands of enterprise systems and payment networks. If this is achieved well, intelligence will be able to see across all blockchain platforms simultaneously, track criminal and suspect payment addresses and patterns, as well as identify repeating abnormal money movements.
EMERGING BLOCKCHAIN INTERNET MARKET VENDORS Chainalysis, CipherTrace (a Mastercard Company), Elementus, and TRM Labs offer insights for authorities that need to investigate hacks. DeFi protocols and exchanges increasingly use the software to stop fraud. These fraud prevention tools should be made freely available to anyone who wants them. Individual users can also purchase the software directly so that they receive alerts prior to sending funds to criminal addresses. It does present a problem. How do we make sure that the tools are not easily reverse-engineered by criminals so they can figure out ways to avoid detection or prevent future heists.
GOVERNMENTS STAND BY IT. The government is also trying to stop criminals from using cryptocurrency. These facts are highlighted in the report. – The U.S. government has issued sanctions against an exchange that was used by ransomware-related criminals. Ransomware and hacking attacks that were high-profile in 2021 led to criminals returning the stolen funds, or law enforcement reclaiming them. Investigators use blockchain data and other curated data to find the blockchain addresses of where funds have been stolen from criminals. The blockchain cannot be used to move stolen funds without their being identified by law enforcement and watchful parties. It is becoming increasingly difficult for criminals, who are now able to steal funds from cryptocurrency networks and commit other crypto-related crimes. TRM Labs recently investigated BadgerDao’s hack. They reported that even though the hacker only used fraudulent identification documents to open accounts on exchanges, it is possible that they could prove fatal for the hacker’s anonymity. The hacker is currently stealing well over $120million worth of assets and then converting them into bitcoin and ether. » At the end of the day, BadgerDao hackers might follow the Polygon Network hackers to return the majority of their stolen money. They won’t be able to access the blockchain to retrieve the funds and will most likely not risk arrest.
VASPS PROTECT US This is a common myth about blockchain networks as criminal havens. The July 2021 FATF report shows transactions made through virtual asset service provider (VASPs), including cryptocurrency exchanges, have a significantly lower chance of being criminal than transactions done through non-VASPs and self-hosted wallets. We are certain that the bad guys will be able to move laundered funds and proceeds through a multitude of legacy payment networks in the future. This is in contrast with the transparent, well-protected, and few blockchain networks. Original publication of this story on Gartner Blog Network.