As the popularity of cryptocurrencies like Bitcoin, Ethereum, and Litecoin grows, so do the number of users who are falling victim to cyber crimes and losing their investments. According to a report from Reuters, these crimes are not only hard to prove, but its oftentimes not clear which agency has the jurisdiction to investigate in the first place.
“A decentralized currency system like bitcoin, or another form of virtual currency is not governed by any entity, suspicious reporting activity, and any anti-money laundering compliance,” said Patrick Wyman, a supervisory special agent with the FBI’s financial crimes section, while speaking to Reuters.
While some of the larger law enforcement agencies are training specialized cryptocurrency investigators to handle high-profile cases, there is little motivation for mid-size and small agencies to spend much time on cryptocrime.
“We do not pretend that every law enforcement agency is devoting resources to every single crime. That would not be possible,” said Europol analyst Jaroslav Jakubcek, while speaking to Reuters.
According to research firms specializing in cryptocurrency, a total of $1.7 billion worth of various coins have been stolen in 2018 so far. This represents roughly 15 percent of the total amount of cryptocurrency currently in existence.
Part of the problem is how chronically under-reported cryptocrime is. Many investors accept the possibility that hackers will steal their coins as just a fact of life. Reuters surveyed six cryptocrime victims and found that only two of them ever reported the thefts, and only one no longer invests in cryptocurrencies.
“We really believe in cryptocurrencies. We have studied this for about a year before investing, so we are aware of the risks,” said Peggy Lachmann-Anke, a German living in Cyprus who, along with her husband, lost more than $14,000 in a cryptocurrency heist. She added during an interview with Reuters, “There was nothing we could do.”
In total, more than 80 percent of cryptocurrency theft is never reported, meaning that any statistics about the number of victims, amount stolen, or location of victims, are not collected. While some victims expect to lose money eventually, others are simply unable to find a law enforcement agency willing to take the case.
“The point is there’s no one to report the crime to,” said victim Dave Appleton, who lost about $3000 worth of ether coins in a scam, while speaking to Reuters. “I am not sure what country or jurisdiction it would come under.”
Much of that has to do with the fluidity of the internet. For example, a person living in New Delhi could easily be robbed by a hacker living in Reykjavik.
“You have to get law enforcement in five countries interested enough, have time enough, and have evidence enough to open a case,” said CipherTrace’s chief executive for cybersecurity, David Jevans during an interview with Reuters. “By the time they agree, get the information, do all the paperwork, the money has been moved.”