New Delhi: Crimes related to cryptocurrency, or crypto crimes as they are more commonly known, could cost the global economy $30 billion annually by 2025, a new report has predicted.
Released Wednesday, the report by Cybersecurity Ventures — a US-based research firm focussing on the global cyber economy — presents a set of facts and figures on cybercrime and cybersecurity.
“Rapid growth in the use of decentralised finance (DeFi) services is creating a new soft spot for global financial systems, fostering new methods of crypto crime for criminals whose ‘rug pulls’ and other attacks will, Cybersecurity Ventures predicts, cost the world $30 billion in 2025 alone,” the report says.
The term ‘rug pull’ is used in the crypto world to describe a scam where crypto token developers encourage unwitting users to invest in a project but then abandon it, leaving investors empty-handed.
According to the report, cybercrime costs overall are expected to grow globally by 15 per cent each year to reach the $10.5 trillion-mark by 2025, compared to $3 trillion in 2015.
It predicts that the use of ransomware (malicious software that blocks access to your computer until a ransom is paid) will increase and cost victims $265 billion annually by 2031, with an attack every two seconds.
In 2021, ransomware-related damages were pegged at $20 billion and an attack took place every 11 seconds, the report says.
Surge in crypto crime
The $30 billion that’s expected to be lost to crypto criminals annually by 2025 is nearly double the 2021 figure, $17.5 billion, according to the report.
It adds that crypto crime and costs associated with it are expected to grow annually at a pace of 15 per cent in the years to come.
“Cybercriminals’ attention to crypto is manifesting in a range of ways,” it says.
These include instances of hackers targeting crypto exchanges — virtual platforms where cryptocurrencies can be bought and sold. For instance, in January 2022, crypto exchange platform Crypto.com admitted that hackers had stolen $30 million worth of cryptocurrency from users.
Other crypto crimes include scams aimed at tricking users into giving away their cryptocurrencies under false pretenses.
“Scammers took $7.7 billion from victims thanks to crypto scams last year alone,” the report says, adding that this is an 81 per cent increase from 2020.
The US Federal Trade Commission, too, had suggested that in 2021, losses owing to crypto crimes increased ten times over the previous 12 months.
‘Money laundering key to crypto crimes’
A report released in July this year by tech giant IBM had said about India: “Reaching an all-time high, the cost of a data breach averaged 176 million [rupees] in 2022. This represents a 6.6 per cent increase from last year.”
The IBM report broke down costs related to breaches into four categories — lost business, detection and escalation, notification, and post-breach response. It found that the Indian economy had incurred a cost of Rs 71 million (Rs 7.1 crore) on post-breach response. “Post breach response costs increased from INR 67.20 million in 2021 to INR 71 million in 2022, an increase of 5.65 per cent” the IBM report noted.
While the 2022 report by Cybersecurity Ventures doesn’t focus on India, a February 2021 report from Chainalysis — a New York-based provider of data on blockchain platforms — noted an India-linked case where cryptocurrency was allegedly used to finance terrorism.
In March 2020, the Delhi Police’s Special Cell arrested a Kashmiri couple — Jahanzaib Sami and Hina Bashir Beigh — from Okhla. The two were later accused of “soliciting cryptocurrency donations to a Bitcoin address they received from a Syria-based ISIS operative” between 2019 and 2020, allegedly to procure weapons and explosives.
The Chainalysis report also emphasises that “money laundering is the key to cryptocurrency-based crime”.
Cybercriminals, who have stolen cryptocurrency or have accepted it as payment for illicit goods, “rely on a surprisingly small group of service providers to liquidate their crypto assets,” says the report by Chainalysis.
It adds that some of these providers “specialise in money laundering services while others are simply large cryptocurrency services and money services businesses (MSBs) with lax compliance programs”.
This comes as crypto exchanges and crypto investment apps headquartered in India, such as CoinDCX, CoinSwitch Kuber, and WazirX, are being investigated by the Enforcement Directorate for possible violations of the Foreign Exchange Management Act.
These alleged violations, according to a report by The Economic Times, include the use of “trade-based money laundering” and “e-hawala”.
(Edited by Amrtansh Arora)