Page 90 - Bloomberg Businessweek July 2018

SAY BYE TO YOUR BITCOIN

There are lots of opportunities for cryptocurrency to go missing—some inherent to buying
internet money, some involving crime. Below, a few common ways of going virtually broke

By Lily Katz and Andre Tartar
Illustrations by Nichole Shinn

NOT REALLY YOUR FAULT SORTA YOUR FAULT TOTALLY YOUR FAULT

Phone Porting Exchange Issues Wrong Addresses

Pretty basic: Scammers It seems as if every week another Unlike credit card transactions, Bitcoin
hijack people’s mobile cryptocurrency exchange says it’s been payments are irreversible. If you send
accounts by calling breached by hackers who’ve run off digital tokens somewhere you didn’t
their carriers and with customer funds. Investors can also mean to, you’re out of luck unless the
impersonating them. lose money on exchanges because of other party agrees to return your funds.
The thieves get their victims’ numbers technology glitches or account holds that
transferred to new devices and ultimately freeze funds and prevent buying or selling
gain access to crypto accounts. during significant market movements.
Twitter Scams
Losses from exchange hacks Fraudsters on social media have devised
a new twist on an age-old con: If you send
them one Ether coin, they’ll send you
51 Percent Attack $500m $ 600m 100 back! Sound too good to be true? It is.
Still, scammers have tried to fool people’s
This hasn’t happened yet, but it’s followers by making fake accounts (with
every crypto enthusiast’s greatest fear. Coincheck real names and photos) to lure victims
If a nefarious syndicate were to gain into thinking that they were being offered
76 control of more than half of the Bitcoin 300 a great deal from a reputable source.
network’s computing power, it could
tamper with the process of verifying $480m $225m 51%
transactions and potentially spend the
same Bitcoins twice. Mt. Gox Losses from Ether- Share of those
related cybercrimes losses from
0 through August 2017 phishing attacks
Ransom Demands 1Q ’14 2Q ’18*

Everyone from local officials to large
corporations has fallen victim to Lost Keys
ransomware attacks, which often Fraudulent ICOs
involve hackers holding computer files There might be no
hostage until the victim pays a fee in Investors have poured billions of dollars worse self-inflicted
crypto. In June 2017 a South Korean into initial coin offerings, only to find their crypto wound than
web provider paid hackers $1 million in savings drained. In April two founders buying Bitcoin low
Bitcoin. Although many payments aren’t of an ICO promoted by boxer Floyd (say, in 2013) and
publicized, it’s the largest ransomware Mayweather were brought up on federal trying to sell high (say,
demand known to have been paid. charges of raising more than $25 million at the end of 2017), then realizing that
for a planned digital currency without you lost your private key. D’oh!
registering the offering. (Mayweather
Average ransomware demand wasn’t accused of wrongdoing.)
Price of Bitcoin at month’s end
Overhyped Stocks $14,311 *THROUGH JUNE 26. DATA: CHAINALYSIS, COINDESK, TECHCRUNCH, SYMNATEC, BLOOMBERG
12/2017
$1,071 Dozens of struggling businesses used the
buzz around crypto to boost their stock
market value in late 2017 and early 2018.
2016 (Long Island Iced Tea Corp. changed its
$522 name to Long Blockchain Corp., but it $7,538
5/2018
Traditional investors looking for exposure
2017 couldn’t raise the capital to mine crypto.)
to the nascent industry bought in, but the
gains didn’t last, and some companies got $20
in trouble with regulators. 1/2013

There were more than 4,000 victims of virtual-currency-related crimes worldwide in 2017, with losses
of more than $58 million, according to the FBI, up from 392 victims and less than $2 million in 2014.