Cryptocurrencies had a great year in many respects. For the first time, large banks started collaborating with cryptocurrencies and considered the idea that this form of payment might actually be here to stay for a long time. We also saw a lot of resistance from the governing bodies and regulators that don’t want to see that change happen and would rather hold the companies dealing with cryptocurrencies back rather than support them. Conversations around this topic became more normal and some companies have even embraced them encouraging development in this field. And while the entire industry struggling to find support with major institutions this year didn’t help a lot with the rise in crypto crime,

This might not make sense for someone unfamiliar with the crypto scene. It would make sense that even though the industry is moving along and creating a stronger connection, having access to more resources despite all that the crypto rate went up encouraging the stereotypes about the industry and adding challenges to its development, even though there is no shortage of those in the first place. In 2019 as much as the crypto world advanced it also opened a door to many more challenges that it still does not know how to face

$12.5 billion lost in crypto

The fact the cryptocurrencies can be used for criminal activity is a well-known fact, but it was starting to improve upon its reputation by the end of 2018 when it became more mainstream and more people started to purchase and trade cryptocurrencies. While the technology is still relatively unexplored it’s difficult to keep control of everything when there aren’t many tools in place to prevent illegal activity. While this year we saw fewer cryptochromes that volume of these illicit activities has grown. That is because the hackers have the upper hand in a sense that they can improve their tactics and pull elaborate schemes, while on the other hand, the companies and providers aren’t immune to these new technologies because they haven’t had enough experience with them to know how to prevent those. There were multiple scams on different crypto funds, some of them amounting up to $4 billion each. The very thing that attracts people to blockchain technology and cryptocurrency is also the reason behind its downfall. Companies often struggle to come up with sufficient enough protection to ensure that they will be safe from any crypto crime but sadly, in some cases, the companies intent from the start is to scam people into believing that their funds are legit.

While the number of crypto crimes will definitely start to go down as we become more familiar with the technology till then there is a lot of work to be done in order to prevent the technology being labeled as completely unsafe which would be nothing but a deception.

Cryptocurrencies offer privacy along with transparency that has ensured the quality of many transactions that go way beyond money. Technology is becoming a crucial part of every business and every transaction. Meanwhile, it takes collaboration with the regulatory bodies to come up with a safer structure for these transactions, something the officials seem very hesitant about. Technology is being used by the crypto users to take care of their crypto assets and that is creating a whole new set of challenges for the market. While technology bitcoin robots can be useful to some users, it is also more likely to be a scam, which can hardly be regulated by anyone and it case of a lie or false marketing the application might still function normally, like there was the case with bitcoin era app, which continues to make inaccurate claims and deceive their customers. While there are technically bitcoin robots that don't rely exclusively on scams, they do still increase the chances for market crashes, but most of the users are willing to take this risk in order to make the process easier, disregarding the danger that these apps and bitcoin robots pose to the market and their assets. 

A big reason why the collaboration between these two isn’t happening is that the traditional institutions are scared of being taken over by these fintech companies who operate using blockchain technology. This often prevents the partnership between more traditional institutions and those operating by using distributed ledger. But another reason seems to be that both parties don’t see a possibility of partnership between largely unregulated technology among with country officials who do in fact need to keep things regulated and under control

The work on strengthening security standards has already begun and we have some results showing that by implementing the necessary changes the companies are able to prevent crimes.

Chainanalysisi published a report saying that, while the number of criminal transactions have doubled, they, in fact, make up less than 1% of all transactions made through technology. The consumer protection is nowhere near the level that it needs to be which is why most of the crypto crime of last year was scamming schemes from crypto funds. This means that the need for strict regulations around the subject is becoming higher. This does not necessarily have to affect the system but more so the system by which some companies gain the right to operate something like a crypto fund needs to be restricted and less easily accessible. Regulation and new laws could really prevent this type of crime from happening, even if they don’t manage to completely prevent these types of schemes.

The fact the regulators need to work more closely with crypto is a given but here are some of the most famous crimes of 2019 that ended up damaging the crypto reputation more than they probably could have imagined.

Onecoin and Plus Tokes

Probably two of the most famous crypto scam that happened this year and that have thousands of people without their assets. One Coin alone is responsible for disappearing with $4 billion worth of cryptocurrency leaving their customers without their money and disappearing completely. Also known as the crypt queen Dr. Ruja Ignatova, a woman behind the scam that started out as a fund, offering to take care of people investment and to help them navigate the crypto world, only for the company to disappear with $4 billion, without any hope for compensation for those who put their resources into this fund.

When it comes to Plus toke the story unfolded a little differently. While this company was apprehended by the Chinese government for scamming over $3 billion in crypto turns out since then they have been dumping these funds back into the market. The Ponzi scheme managed to scam out of their victims 800,000 BTC and 800,00 ETH.  Cryptomarket has been very inconsistent over the past few months and it well could be that the dumping of over around 1 million cryptocurrencies could have something to do with it. These sorts of crimes don’t happen all that often but they have grown exponentially in their size. So while if you are trading crypto as a hobby or have only a small amount of your asset sput to that, the risks are much lower but when you work with a company that doesn’t necessarily have along with trustworthy past you could be setting yourself up for failure.

Crypto crimes could be prevented and there are many mechanisms already in place that would help companies and the client to have more control over their assets. As the years go by and technology becomes more well-rounded there will be more ways to prevent these sorts of activities. But ultimately  it will be up to regulators to create an environment where these actions are prevented in the first place. It will become harder for these schemes to function when there is a set of rules and laws that protect the customer.

While the future of finance lies in blockchain technology it should be treated with equal perseverance 2019 served as a wake-up call for regulators that they need to be more in tune with the demand of the market and make sure that they are working together and not against these entities.

The stubborn attitude of the government officials and their unwillingness to prioritize this point to the fact that they don’t see this as enough of a priority to focus on or that they are unwilling to welcome such radical changes in the financial world.

But since the demand on the crypto does not seem to be changing and keep growing even amidst the volume of the asset that has been stolen keeps rising this is a clear indicator that blockchain services really are valued and some people are willing to risk this in order for the fast and transparent services that are decentralized and will not be seen by the large organizations.

Since some countries are showing more lenient attitudes towards cryptocurrencies we might see this change happen in the following year, where the government officials stop resisting the change and focus on the positive development of the industry instead of trying to stunt the growth of the innovative field that could potentially make the lives of millions of people easier. What most customers look for these days is that convenience and user-friendly setup. The financial world has long been in the need for the makeover since the traditional services are getting less and less popular. Banks are trying to keep up with the technologically advanced but in the end, there isn’t any denying that blockchain technology will become bigger and the users will turn to it for convenience. It is in the interest of these regulatory bodies to ensure the safety of the transaction and to work closely with them.

The attitude that both sides share is that they are waiting for the other side to budge first and follow the request for the other. While Regulators want to access the information and less privacy blockchain technology can’t necessarily give up on these things because it might compromise the entire point of it. In this situation, it is pretty obvious that the cryptos and the blockchain have the upper hand and it could be that the with time the lawmakers will learn to coexist with technology while allowing it some extra freedom but keeping an eye on it at the same time to ensure that the safety of the customer is always protected and the criminal activity is kept to a minimum by preventing those will ill intent entering the market in the first place.