From Reactive to Proactive: Why Is the Crypto Industry Changing Its Approach to Crypto Theft?

The crypto industry didn’t have an easy 2022. Starting with a crypto winter that had investors and projects scrambling, news like scams by popular influencers, the fall of industry giants, and increasing regulatory pressure quickly followed. This year, however, has been much better as the market steadily recovers and the community can shift its focus to solving important challenges. Ensuring that threats like crypto theft don’t get in the way of adoption is one of them.

As one of the most disruptive technologies of the past two decades, the crypto community has grown used to be in the spotlight. This position has allowed the industry to attract investors like Andreessen Horowitz and crypto adoption to steadily grow over the past 3 years. Global crypto ownership increased by 39% in 2022 according to a report by Crypto.com, meaning that more than 425 million owned crypto by January of 2023.

Unfortunately, not everything is good news in crypto land as illicit activity continues to be a major concern despite the progress made over the past years. Chainalysis’ latest report on crypto crime found that the value of all crypto received by illicit addresses increased by $2.5 billion in 2022.  While this represents a decrease in the share of illicit activity in all cryptocurrency transaction volume when compared to the 2017-2020 period, it is a 0.12% increase when compared to 2021. According to the report, this peak was the result of reduced transactions during the crypto winter and increased activity by governments using crypto to evade sanctions.

Other findings include that while ransomware and scams saw a reduction in revenue this year, the total value of stolen funds increased. This highlights the need for more efforts by the industry to educate its users and provide them with the necessary tools to ensure the safety of their assets. Fortunately, crypto’s role in the global financial system and the approach of clear regulatory guidelines mean that the crypto industry has improved significantly over the years in this regard.

The pseudo-anonymity and complex technical nature of blockchain have long been the main reason for bad actors to flock to the space. As such, the crypto industry has increased its cooperative actions to recover stolen funds and blacklist bad actors over the past years. While these efforts have had a positive impact so far, they have been criticized for threatening decentralization and not being proactive enough. This, of course, is more important at a time when regulators are more watchful than ever before.

This year’s edition of Grit Daily House at Consensus hosted a panel exclusively to discuss “The End of Crypto Theft”. Fox Business Network Journalist Eleanor Terrett sat with Harpie CEO Daniel Chong, Presend Co-Founder & CEO Drew Wolfer, and Metallicus CFO & Board Member Irina Berkon to discuss how the industry is tackling the crypto theft challenge at this critical time. To learn more about what these experts and leaders had to say, make sure to watch the video below or on Grit Daily’s official YouTube channel!