Cryptocurrency is one of the key factors that fuel cybercrime, which cost the global economy $600 billion in 2017, or 0.8 percent of global GDP, a new report says.
The report, based on a study conducted jointly by computer security giant McAfee and the Center for Strategic and International Studies (CSIS), points to the alarming magnitude of the global economic impact of cybercrime.
The report, titled “The Economic Impact of Cybercrime: No Slowing Down” found that theft of intellectual property represents about one-fourth of the cost of cybercrime last year.
The cost of cybercrime in the worldwide Internet economy is estimated at $4.2 trillion in 2016.
The latest update of the popular 2014 report attributes the growth over three years to hackers quickly adopting new technologies, proliferation of criminal marketplaces and the easy access for cybercriminals to leverage black markets and digital currencies.
“The threat of law enforcement action has forced most cybercrime dealings onto the dark web, where the anonymity of cryptocurrencies such as Tor and Bitcoin protects actors from easy identification,” it said.
Bitcoin has long been the favored currency for darknet marketplaces, with cybercriminals taking advantage of its pseudonymous nature and decentralized organization to conduct illicit transactions, demand payments from victims, and launder the proceeds from their crimes.
Cybercriminals benefit from the fact that no personally identifying information is linked to the use and exchange of Bitcoin, allowing criminals to operate with near impunity despite the fact that all Bitcoin transactions are publicly recorded.
South Korean government last month had issued guidelines for banks to require cryptocurrency exchanges to share users’ transaction data, thus eliminating anonymous cryptocurrency trading, and enforcing real-name identity verification on traders.
But the report notes that a number of services have been established in recent years that allow cybercriminals to launder their Bitcoins and withdraw them through unregulated exchanges to avoid being caught.
Through the process of “tumbling,” or “mixing,” multiple users pool both clean and dirty Bitcoins together, letting a program execute a series of exchanges between the members that eventually gives the users back their money in randomized coins.
The report cites the example of cybercriminals utilizing unregulated cryptocurrency exchanges that obscure customer information. In the case of recently shut down BTC-e exchange, cybercriminals are thought to be responsible for 95 percent of all ransomware cash outs.