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Mastercard is launching Crypto Secure to help banks assess the risk of crime associated with crypto merchants on its network. The service, powered by Mastercard-owned blockchain security startup CipherTrace, combines applies artificial intelligence to blockchain data and public records of crypto transactions, along with other sources, to determine crime-related risks of crypto exchanges within the Mastercard network. On the Crypto Secure platform, banks and other card issuers are shown a dashboard with color-coded ratings representing the risk of suspicious activity, with severity of risk ranging from red for "high" to green for "low."

According to a report by from the office of U.S. Senator Elizabeth Warren, fraud and scams are a growing problem on peer-to-peer (P2P) payment service Zelle, and the banks that run the platform are not refunding the vast majority of defrauded consumers, breaking their promises to their customers and potentially violating federal law. A response by the industry acknowledged that Zelle,  like every instant P2P payment service, is not entirely free from those who seek to defraud users, but expanding the bank liability framework would have adverse impacts on consumers choice, the cost of the service, and on small financial institutions for whom the costs related to the potential for unlimited liability would be too onerous.

"There's a gaping hole in the crypto industry's security architecture, and even the most deep-pocked players haven't figured out how to plug it. The weakness in question is what's known in industry parlance as cross-chain bridges -- software that allows crypto tokens to move between different blockchains. On October 6, 2022, a hacker made off with about $100 million via a bridge used by Binance... Chainalysis estimates that $2 billion worth of tokens have been looted from 13 separate attacks, the majority of which was stolen this year."

After a run of thefts from decentralized finance (DeFI) platforms, the US Federal Bureau of Investigations (FBI) has warned that criminals are increasingly exploiting bugs in these platforms to steal investors' cryptocurrency.

According to Chainalysis, cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020. However, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, transactions involving illicit addresses represented just 0.15% of cryptocurrency transaction volume in 2021, versus 0.62% in 2020. The yearly trends suggest that with the exception of 2019 - an extreme outlier year for cryptocurrency-based crime largely due to the PlusToken Ponzi scheme - crime is becoming a smaller and smaller part of the cryptocurrency ecosystem.

According to Chainalysis, crypto-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020. However, this represented just 0.15% of total crypto-asset transaction volume, which grew to $15.8 trillion in 2021, up 567% from 2020's totals. Hence, illicit activity's share of cryptocurrency transaction volume is actually declining.

OpenSea is investigating a phishing attack aimed at users of its non-fungible token (NFT) platform. The hacker(s) stole several NFTs and had already sold a few for ethereum worth $1.7 million, according to CEO Devin Finzer. NFTs are blockchain-based deeds of ownership to different kinds of digital items, from expensive illustrations of apes to collectibles like celebrity autographs.

ccording to blockchain security firm PeckShield, the amount of money netted from decentralized finance (DeFi) hacks in the first four months of 2022, $1.57 billion, has already surpassed the amount netted in all of 2021, $1.55 billion. Chainalysis found a similar trend, with the hacker haul in the first three months of 2022 exceeding a record set in the third quarter of 2021. The biggest hacks were Axie Infinity's Ronin bridge exploit ($650 million), the Wormhole network exploit ($320 million) and the Beanstalk Farms governance attack ($180 million). The biggest hacks of 2022 were carried out by attackers spotting vulnerabilities in smart contracts and protocols, especially in cross-chain bridges and flash loan protocols. According to Chainalysis, because blockchain code is typically public, hackers can view it easily to spot vulnerabilities and manipulate the protocol to exploit it.

"Pig butchering, as it's known, is a new type of online con perpetrated by overseas scammers who "fatten" up victims - making them believe they have made boatloads of money in cryptocurrency often using manipulated apps and websites - before absconding with all their money. Experts say billions of dollars are lost to this type of pernicious scheme each year. The hard truth is that recovering money lost to crypto scams is extremely rare, even when law enforcement does take up a case. But in recent years, a nascent industry has cropped up, offering services that promise to do just that. These companies convince consumers to spend more money in order to recover their already-lost sums, with scant evidence that they regularly work as advertised."

Over 13 million ($3.5 million) ALGO has reportedly been stolen between 19th to 21th of February, over 12 accounts have been affected. Most of the stolen ALGO was transferred to the ChangeNow, a non-custodial crypto exchange that operates without extending know-your-customer (KYC) to all its users. However, the ChangeNOW team has implemented anti-money laundering (AML) mechanisms designed to detect fraud and filter suspicious transactions, and had halted $1.5 million of suspicious ALGO and USDC transactions on the Algorand blockchain and stopped the malicious actors from accessing the stolen funds any further.

"There is a non-zero chance of a MyAlgo wallet software compromise leading to the theft of at least $7.2m worth of assets on the Algorand blockchain. We recommend rekeying MyAlgo accounts to fresh private keys, or simply moving funds where possible. This precautionary remediation of further risk should not have usability impact and, if done carefully, may have a significant security benefit."

Ilya Lichtenstein and his rapper wife, Heather Morgan, were arrested in New York for allegedly trying to launder Bitcoin that was stolen during the 2016 hack of Bitfinex, and the Justice Department has seized more than $3.6 billion of the $4.5 billion of the stolen bitcoin. David Gerard covers this story in detail, with an eye towards assessing whether the two alleged money launderers could have been responsible for the Bitfinex hack, concluding that they have the minimal skills needed.

According to Chainalysis, In 2023, illicit addresses sent $22.2 billion worth of cryptocurrency to services, versus the $31.5 billion sent in 2022. Some of this drop may be attributed to an overall decrease in crypto transaction volume. However, the drop in money laundering activity was steeper, at 29.5%, compared to the 14.9% drop in total transaction volume. However, there was a big increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds, and a substantial increase in funds sent from ransomware to gambling platforms, and in funds sent to bridges from ransomware wallets.

Elliptic published its 2024 typologies report on the nexus between crypto-assets and financial crime. This year's report is designed to equip compliance teams and law enforcement with the practical insights needed to continue to detect new financial crime risks with success. The report includes case studies and insights on the convergence of AI and crypto-assets and how it is impacting criminal activity, the increasing use of stablecoins in financial crime typologies including pig butchering scams and sanctions evasion activity, and major law enforcement and regulatory actions with additional case studies.