The Dark Side of Crypto
🚀 What’s happening: Cryptocurrency and other alternative forms of money are going to play a larger and larger role in our future. But today, given the lack of regulation and standardization of this emerging industry, there is dark side that deserves some attention.
What’s going on?
Reports indicate that Hamas has used crypto to raise tens of millions in funding. They are not alone. Terror organizations and other bad actors around the world used Crypto to conduct over $20 billion worth of illicit activity in 2022 according to recent data (and this is a low ball estimate). Such illicit activity includes: money laundering, fraud, drug trafficing, human trafficing, child exploitation, terror funding, and cybercrime.
Why do they use crypto?
There are several reasons anyone looking to conduct nefarious business would use crypto.
Easy to be anonymous. Identities of every crypto transaction are very hard to uncover. Transactions are made from one crypto address to another with an address being no more than a random string of characters.
No verification. Cryptocurrency can be transferred between peers with no former relationship or any third party serving as a mediator.
Speed. All you need to conduct a transaction is an internet connection and a wallet application. That’s it. In a few clicks you can transfer money anywhere in the world.
All digital. Crypto doesn’t need any physical storage so it’s very hard to steal. In addition, each wallet is unlocked by one private key. If you don’t know the private key, you’re out of luck. Conversely, if you know someone else’s private key, you will gain access to their full crypto wallet.
Borderless. There is no distinction or clearing on where crypto is being transferred. They can be transferred anywhere in the world at the drop of a hat (all you need is the address).
Where this is all going?
More regulation is coming although it remains slow (in the U.S. the current administration has turned over regulation responsibility to the SEC who handles most market regulation and is in process of looking at it). Given some of the more widely reported scams (like FTX) we would expect to see U.S. regulators coming down hard on cryptocurrency in the coming years.
👪 Closer to home: We don’t want to sound too negative on cryptocurrency and do believe that overall alternative forms of currency to our fiat money system will be more and more valuable. Investing in cyrpto is a personal decision, and while we currently don’t, it doesn’t mean that we are right (we are the first to admit we may be wrong!).
That said, until the market gets more regulated this illicit activity will remain and bad actors may look to increase attempts to target you whether or not you currently invest in crypto. A few things you can do to stay on high alert are:
Protect your keys. If you invest in crypto, this one goes without saying. Protect your wallet keys from everyone.
Don’t click on links. If you get a email that looks off or are contacted by someone you don’t know about crypto, don’t click on any links. If people get access to your information they can use it to buy crypto.
Talk to your kids. If your kids are investing in crypto or curious about the subject, make sure they know about some of these scams and are on high alert. Dating apps are quickly becoming a way that fraudsters try to steal your information and use it to buy or steal crypto.
Some further reading:
