In 2023, hackers have already stolen $119 million in cryptocurrency across 19 security breaches, according to a report from Crystal Blockchain. These breaches predominantly exploited vulnerabilities in Decentralized Finance (DeFi) protocols, a trend emphasized by the fact that in 2022, DeFi protocols were targeted 13 times more often than centralized ones.
Marina Khaustova, CEO of Crystal Blockchain and former Chief Marketing Officer and co-founder of Element Capital Group, spoke to these security concerns. With over 12 years of entrepreneurial experience in developing global online services and digital marketing strategies, she is well-versed in the challenges of the digital finance industry. “Levels of crime are increasing at alarming rates,” Khaustova observed. “At the end of the day, it is important that we all act fast, and with impact, to prevent crime rates from spiraling out of control.”
Rising NFT Scams and Increasing Crime Rates
Non-Fungible Token (NFT) scams, particularly ‘rug pull’ scams, are also on the rise. These scams involve project founders disappearing with users’ funds. The Crystal Blockchain report indicates that 48 such scams occurred in 2022, with a majority (41) occurring in the second half of the year.
Crypto crime rates are escalating at an alarming pace, an issue of which Khaustova is especially aware. The amount of crypto funds stolen jumped from $12.4 billion in 2021 to $16.6 billion in 2022. “We make it our business to equip our clients with tools that are not only effective at detecting malicious activity, but that are also easy to implement and use,” she asserted, reinforcing her company’s commitment to tackling the escalating issue.
Addressing the Challenge of Security and Regulatory Compliance
With the growing complexity and evolving nature of anti-money laundering regulations, regulatory compliance has become a pressing challenge for the cryptocurrency industry.
In response to these challenges, the industry is adopting a multi-faceted approach. Crystal Blockchain, under Khaustova’s leadership, is enhancing its analytics and monitoring solutions to detect suspicious blockchain activity. The firm has significantly increased the number of blockchains it can monitor on its platform to 335, covering over 30% of the world’s chains.
Tools are being developed to assist with regulatory compliance by checking transfers on various blockchains. Such tools are essential for tracing illegal activity and ensuring compliance with anti-money laundering regulations.
Boosting Awareness and Enhancing Capabilities
Efforts are underway to raise awareness about potential scams and fraudulent activities. These initiatives are aimed at informing users to make more informed decisions, thereby reducing the likelihood of crimes such as NFT rug pulls.
Strategic hiring is also a crucial component of industry-wide efforts to confront these challenges. Firms like Crystal Blockchain are bolstering their teams with executive-level hires with expertise in software and blockchain to improve their analytical and investigative capabilities.
The collective efforts of these initiatives are aimed at making the cryptocurrency industry safer and more resilient to cyber threats while promoting regulatory compliance and trust among users and investors.
