10% of Nearly $4 Billion in ICO Funds Stolen – EY report

10% of Nearly $4 Billion in ICO Funds Stolen – EY report

Hackers keep benefiting from the crypto world. According to the latest EY (formerly Ernst & Young) report, over 10% of a significant sum, collected to the initial coin offerings (ICOs), was swiped. The information was published on Monday, January 22, and it indicated that on average hackers thieve $1.5 million.

Fishy Theft

For those, who have been living under a rock, ICOs collect capital for blockchain technology-based projects. The money is raised by vending virtual coins. Hence, those, who purchase them, will either be able to use the benefits of the project or gain profits from the coins’ price growth. Moreover, as developers claim, ICOs help to dodge red tape headache which investors can face while collecting venture capital. By the way, EY assesses that aggregated VC investments in blockchain-based blueprints are just 50% of the sums that ICOs have collected.

As CNBC emphasized, it is widespread when blueprints which back up ICOs roughly function beyond a whitepaper. Furthermore, lots of such projects are considered as fraudulent ones. But as hackers thieve the funds, developers are jeopardized: they might never receive the raised capital.

It was a disturbing signal for the token sales. The 1/10 part of $3.7 billion gathered in ICOs has been stolen. EY concluded:

"Phishing is the most common form of funds theft during ICOs. Hackers steal ... up to US$1.5 million in ICO proceeds per month."

To clear it up: commonly, hackers may deceive someone and make them open up about useful private info. Usually, they do it by professing to be legitimate. Such a malicious trick is called a phishing attack. There have already occurred lots of them. One among the recent ones took place last year August. Then, according to EY, fraudsters created ‘twin’ pages to several virtual money projects and managed to thieve this way about $1.4 million.

Huge Money At Stake

Interestingly, when such a financial institution as a bank experiences a hacker attack, the sum it loses Is $1.5 billion. But the case differs from the ICOs’ situation by the fact that bank’s capital is traditionally secured by insurance. On the contrary, in November 2017, virtual money trading platforms suffered from $2 billion losses because of cyber-attacks on average, but their blockchain techs preclude operations from reversion.

Data Breaches

Nevertheless, the loss of funds due to hacks is not the only concern. Another alarming sign is the breach of private information. The majority of trading platforms does not have policies concerning private information usage and custody. Individuals with vicious intentions use this as an opportunity to get valuable data. As EY says, there is even no need for a breach to take place.

Finally, the report conveyed that only 25% of ICOs accomplished their capital gathering aims in November 2017. In contrast, ICOs achieved 90% of their goals just a few months before that – in June 2017. The reason for this is not only the hacking attacks but also the growing fears about regulation, which ICOs might face.

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