Chainalysis Report: Crypto Crime Is Dominated by Two Hacking Groups, $1B Was Stolen

According to a new report from Chainalysis, two professional hacking groups likely have stolen about $1 billion in crypto hacks, at least 60% of all publicly reported hacks.

Moreover, Philip Gradwell, the chief economist at Chainalysis, told Wall Street Journal that the two entities probably are still active.

Based on Chainalysis’s investigation, they believes these hacks are connected to two groups, which it labeled alpha and beta. Alpha is “a giant, tightly controlled organization at least partly driven by non-monetary goals.” In contrast, Beta “seems to be a less organized and smaller organization absolutely focused on the money.”

Both hacking groups seek to evade detection between the hack and their exit. They typically try to cover up the criminal origins of money stolen through a complex array of wallets and exchanges. The hackers then often observe a quiet period of 40 or more days in which they don’t move funds, until interest in the theft has died down. Once they feel safe, they move quickly. At least 50% of the hacked funds are cashed out through some conversion service within 112 days.

For a long time, cryptocurrency exchanges and investors have been targets of hackers. Back in early January, Ciphertrace's cryptocurrency anti-money laundering report revealed that about $927 million worth of assets were stolen from cryptocurrency exchanges in the first three quarters of 2018. The hackers exploited vulnerabilities in encrypted wallet software and servers to steal billions of dollars in assets.

According to Ciphertrace, the Lazarus group, a north Korean hacking group, is believed to be involved in a series of hacking attacks. They are widely seen as nationalist players tasked with cybertheft and helping to drive north Korea's troubled economy.

The Lazarus group has reportedly stolen more than $571 million in cryptocurrencies since the start of 2017, and 65% of the stolen cryptocurrency ended up in north Korea.

Thus, an in-depth understanding of how hackers move funds allows legitimate participants to identify unusual spikes in transactions that may be associated with criminal activities. Cooperation among cryptocurrency exchanges also helps combat any crimes in the ecosystem. At the same time, neutral intermediaries between exchanges can play an important role in this work.

Photo: Pixel.com

Author: Max Li

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