Hackers were able to steal $400 million from more than 300 ICO or initial coin offerings for the past two years according to research conducted by Ernst & Young. The firm emphasizes the risky market brought on by cryptocurrencies. Phishing is the common way a theft is done online. The phishing process lures victims to click on malicious links. Ernst & Young reports that as much as $1.5 million of ICO funds are stolen each month. The firm is demanding higher cryptocurrency security standards in order to halt online thefts.
Greg Cudahy – global technology, media and entertainment and telecommunications leader of Ernst & Young – believes that standards accepted by all parties encourage the prevention of fraud, promotes transparency, and confirms legitimacy. He adds, “The protection of investors and users alike has a greater chance of success.” Cryptocurrency proves to be attractive to hackers due to its quick growth as well as the large quantities of money involved. Popular digital currencies such as bitcoin have created a significant buzz that companies have been seen jumping on the cryptocurrency bandwagon. KFC and Ghostface Killah are dipping their toes into this new technology.
Ernst & Young’s report details the reason for hackers’ obsession with cryptocurrency: “Hackers are attracted by the rush, absence of a centralized authority, blockchain transaction irreversibility and information chaos.” Besides monetary theft, hackers also steal users’ personal information such as phone numbers, addresses, credit card numbers, and bank details. Besides poor security, Ernst & Young cites the absence of strict regulation and poor ICO valuations standards as the reason for the frequency of attacks. ICO tokens are also valued on its hype. Countries such as South Korea and China have banned the use of cryptocurrencies. Canada, the US, Australia, and Japan are currently attempting to regulate ICOs using standing laws which may be applicable.