Between October 2020 and March 2021, some US$80 million has been stolen in cryptocurrencies from about 7,000 users. This constitutes more than 1,000% as compared to the year before.
Scams and fraud still rampant
When it deals with money, there will surely be those who are out to make a quick buck. Hence, cryptocurrency scams and fraud are very common. The cryptocurrency is known for being decentralized and anonymous. These are vital factors that gave rise to a lot of loopholes (although they are the reasons why people are investing as well). One of the most startling cases came about when more than US$10 million was stolen in the few days before the ‘Saturday Night Live’ episode featuring Tesla boss Elon Musk.
The alarming reality
The crypto market is entirely different from the other money markets. There are no definite ways to protect your accounts from thieves and there sure aren’t any guarantees too. The PIDM (Perbadanan Insurans Deposit Malaysia) does not protect your savings in crypto exchanges like they do with your savings accounts. So, where does that put you in the risk factor and the greater scheme of things? The reality is that:
- Cryptocurrency thefts amount to about US$10 million a day (as of the end of 2020).
- In Malaysia, there has been a sharp increase in complaints related to money scams in 2020.
- 2 of the largest crypto exchanges in Turkey recently ceased operations and users lost millions.
One thing for sure, the loopholes are there. So, what can you do to protect your hard-earned money? Sadly, there isn’t any sure-way to combat this.
Best practices in authentication
The FIDO or Fast Identity Online authentication model is among the most reliable and secure. It helps to avoid machine-in-the-middle instances which means it can avoid phishing and sniffing. This has since been adopted by some of the larger exchanges like Coinbase and Binance (although they have yet to be authorized in Malaysia).
Multiple authenticators would be essential although it might be counter-productive.
As the market becomes more accessible and with the increasing number of traders, the crypto market is set to flourish in the coming years. This calls for more emphasis on the factors of privacy and anonymity. Until that happens, be cautious about where you put your money in, which wallet you are storing them and through which exchange you are dealing.