Investors have lost $670 million of cryptocurrencies in hacks and scams over the past three months, according to data shared with Business Insider.
Crypto Aware, an educational service for cryptocurrency investors, compiled data on all the major hacks and scams in the space from June 2011 through March 2018.
The data shows that over $1.7 billion worth of cryptocurrency was stolen over the period, with $670 million, or 40% of the total value, lost in the first three months of 2018 alone.
Notable losses since the start of the year include the $400 million hack of the Japanese cryptocurrency exchange Coincheck in January and a $170 million hack of the cryptocurrency exchange BitGrail in February.
“Cryptocurrency is receiving more and more validation as a means of value transfer, with top coins reaching historically high prices toward the end of last year — this attracted a lot of new, unseasoned investors who are not well-versed in terms of online security and who are identified as easy targets by scammers,” Anna Wu, the founder of Crypto Aware, told Business Insider.
The size of the cryptocurrency market rose from about $27 billion last April to close to $270 billion as of Tuesday. The market exploded thanks to the rise of bitcoin against the dollar and the new trend of so-called initial coin offerings, in which startups issue their own digital coins to fund their businesses. Startups raised $5.6 billion through ICOs in 2017.
“Cryptocurrency frauds, scams, and hacks tend to rise every time there is considerable upward momentum in pricing for cryptocurrency market, so be extra cautious when the market is bullish,” Wu said.
Crypto Aware’s figures highlight the risks associated with the volatile and unregulated market. Many investors store their crypto centrally on exchanges, and these large holdings make them an attractive target for hackers.
Scammers have also fraudulently raised millions from unknowing investors, such as the Chinese Ponzi scheme “Asian-European Currency,” which the police shut down early last year.
Wu told Business Insider that investors shouldn’t invest more than they could afford to lose and should inspect URLs closely.
“Phishing scams are by far the most popular type of scams, and you can easily avoid them by checking the website address against the officially published URLs character by character,” she said.
“If it seems too good to be true, it is,” she added. “Investment scams often try to entice gullible investors with unrealistic returns. Don’t be greedy.”
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