CipherTrace: Crypto Theft, Crypto Money Laundering Skyrocketing

July 9, 2018         By: Steven Anderson

While it was pretty easy to roll our collective eyes at the calls for more regulation in the cryptocurrency market—especially while bitcoin was on a rocket sled to turning pennies into private island money—a new report from CipherTrace sent our way suggests that maybe regulators have a point. The CipherTrace report revealed huge gains in cryptocurrency theft and money laundering using cryptocurrency.

The report led off with a bombshell: just in the first half of 2018, more than three times the cryptocurrency was stolen from exchanges than in all of 2017. That’s a big gain, and it only gets worse. Those cryptocurrencies taken from exchanges, seized in ransomware operations, or in anything similar need to be laundered accordingly, and that means a likewise hike in the sheer amount of such operations.

There has already been a response to such issues, mainly in the form of new kinds of software that can actually track cryptocurrency through the blockchain system, a strange new development that can spot so-called “tainted money” and help keep it out of the hands of legitimate operations who would otherwise receive it unknowingly.

CipherTrace CEO Dave Jevans, who also serves as the co-chair of’s Cryptocurrency Working Group, noted “Until now, the lack of regulatory guidance has hindered the broader adoption of cryptocurrencies. Now we are seeing the big guys coming together asking for cryptocurrency anti-money laundering regulation—it is inevitable, it will be unified, and it will be global. There will be little room for privacy coins without AML or mixers in these Know Your Customer and Anti-Money Laundering regulated regimes….”

While such moves raise grave concerns over privacy—tracking “tainted money” turns into tracking “everyone’s money” surprisingly quickly—the issues of theft and laundering do require some kind of responses. A technological approach might be the proper middle ground between “Wild West” and “complete ban,” but it’s likely one that will leave some crypto purists unnerved. Still, if this is the next step forward, and the thing that takes current crypto holdings into the explosive future, then maybe it’s just the cost of doing business.

Only time will tell how this works in the long run, but based on the numbers, a solution of some kind was called for.