Hacked and scammed: investors navigate cryptocurrency ‘wild west’

A record $21.3 billion flowed into new tokens so far this year as investors keep snapping up initial coin offerings, according ICO tracker Coinschedule said. (Reuters)
Updated 18 October 2018

Hacked and scammed: investors navigate cryptocurrency ‘wild west’

  • ‘We have studied this for about a year before investing, so we are aware of the risks’
  • ‘It’s impossible to track and return the funds. We live and die with this technology’

NEW YORK: When Peggy and Marco Lachmann-Anke learned in January that hackers cracked a 40-character password and cleaned out their cryptocurrency wallet, they did not go to the police or alert the tokens’ issuer, the Berlin-based technology group IOTA.
They bought more coins.
The Cyprus-based German couple, who describe themselves as financial educators, figured they had no chance of recovering the coins and it was not even clear who might take up their case. Yet they took the roughly $14,000 loss in stride — something that comes with the territory when one bets on a new, exciting technology in a yet unregulated market.
“We really believe in cryptocurrencies. We have studied this for about a year before investing, so we are aware of the risks,” Peggy Lachmann-Anke said. “There was nothing we could do.”
Far from unusual, the episode is emblematic for a market where few rules apply and where investors’ faith in the blockchain technology goes hand in hand with the belief that it also helps criminals cover their tracks so well that trying to catch them is a fool’s errand.
Patrick Wyman, FBI supervisory special agent at the financial crimes section of the agency’s anti-money laundering unit acknowledges cryptocurrencies pose some unique challenges.
“A decentralized currency system like bitcoin, or another form of virtual currency is not governed by any entity, suspicious reporting activity, and any anti-money laundering compliance,” Wyman told Reuters.
Various estimates show cryptocurrency crime is on the rise, keeping pace with the market’s rapid growth. That forces investigators to focus on high-profile cases, security professionals and officials say, effectively leaving small investors to their own devices.
“We do not pretend that every law enforcement agency is devoting resources to every single crime. That would not be possible,” said Jaroslav Jakubcek, an analyst at Europol, which serves as a center for the European Union’s law enforcement cooperation, expertise and intelligence.
Officials still encourage people to report cryptocurrency theft to local police like any other crime, saying failing to do so only emboldens criminals.
Yet because many victims simply do not see the point, cryptocurrency theft is far more common than any published estimates suggest, security professionals say.
According to financial research firm Autonomous NEXT and Crypto Aware, which works with investors affected by crypto scams, about 15 percent of cryptocurrencies have been stolen between 2012 and the first half of 2018, representing a cumulative $1.7 billion in value at the time of the theft and with a rising tendency. In the first half of this year alone, more than $800 million has already been stolen, according to the data. Yet Lex Sokolin, a partner and global director of fintech strategy at the firm, estimates that as much as 85 percent of crimes go unreported and says the published statistics only represent publicly reported heists.
Reuters interviews with half a dozen victims paint a similar picture. Out of that group only two reported their losses to the authorities and one soured on cryptocurrency investments.
Armin Fischer, a Vienna-based IT specialist said he lost about $5,300 in ether coins in a phishing scam in the summer of 2017 and immediately alerted the local police just to find out that the duty officer had no idea what he was talking about.
He said it took many months of knocking on doors to get his case ultimately taken up by Vienna prosecutors’ office, but it is still pending. Fisher says by now he has had enough.
“I have seen firsthand how big the security leaks are.”
Others are more philosophical.
Dave Appleton, a blockchain developer for HelloGold, a gold trading app company in Kuala Lumpur, said he lost about $3,000 of ether coins when scammed by a fake site touting a startup’s token pre-sale. He said he just moved on, glad he did not lose more.
“The point is there’s no one to report the crime to,” Appleton said. “I am not sure what country or jurisdiction it would come under.”
According ICO tracker Coinschedule a record $21.3 billion flowed into new tokens so far this year as investors keep snapping up “initial coin offerings,” undeterred by high-profile heists, bitcoin’s and other currencies’ slide from late 2017 peaks, and government warnings of widespread fraud and theft.
David Jevans, chief executive of cybersecurity firm CipherTrace in Menlo Park, California, estimates that even when exchanges or trading platforms get hacked, perhaps only a fifth of stolen coins is recovered because of the ease with which digital tokens can move across several borders.
“You have to get law enforcement in five countries interested enough, have time enough, and have evidence enough to open a case,” he said. “By the time they agree, get the information, do all the paperwork, the money has been moved.”
Security experts say in most cases millions need to be at stake to justify such an effort.
US entrepreneur and long-time cryptocurrency investor Michael Terpin, who says he got robbed twice, learned firsthand that not all hacks are created equal.
He said first time when criminals accessed his cellphone with stolen SIM card credentials, emptied a wallet connected to it, and tricked his friends into sending money by impersonating him on Skype, he contacted a friend at the FBI.
But once she learned that only $60,000 got stolen, she advised him to file a report via the FBI’s Internet crime center website. Terpin said he did, but never heard back.
Then, when last January he lost almost $24 million in tokens from his mobile account, he went straight after the service provider AT&T, filing a $224 million lawsuit accusing it of negligence that allowed “digital identity theft,” a claim AT&T denies.
Undeterred, Terpin says he remains committed to blockchain comparing it to the early days of Amazon.com Inc. when the online retailer faced much skepticism and even derision.
“That’s similar to today’s narrative that all ICOs (initial coin offerings) are scams and nothing will ever be developed of value because they’re not already fully deployed,” he said.
Steadfast commitment to the new technology and belief that it gives sophisticated criminals the upper hand means that even some multimillion heists go unreported.
For example, when hackers stole about $9 million worth of ether tokens from a Zug, Switzerland-based company Swarm City in July 2017, the peer-to-peer digital platform did not report the theft to the police, business leader Bernd Lapp said.
“It’s impossible to track and return the funds. We live and die with this technology.”


Waking the sleeping giants above Saudi Arabia’s deserts

Milky Way core rising above Wahba Crater. (Credit: Huda Alerwy)
Updated 26 October 2020

Waking the sleeping giants above Saudi Arabia’s deserts

  • Saudi stargazers are fusing ancient traditions with cutting-edge technology

JEDDAH: Saudis have for years wandered off to explore the country’s varied landscapes, with excursions that focus on stargazing and meteor watching.

The Kingdom’s vast, open lands provide one of the most optimal views of space in the region, a hidden secret has not been fully discovered yet, and which feeds curious minds and wakes the sleeping giants above.

For thousands of years, Arabs traveling across the region’s lands used stars to navigate through rough terrain and vast deserts. Indigenous tribes inherited their navigation skills on land and sea from those who traveled from one end of Arabia to the other.

Today, satellites and navigation apps do the job instead, but people’s curiosity has remained, and many still look up at blue or red dots of glowing planets, star systems, and constellations in a bid to understand their historical significance and beauty.

Photographers in the Kingdom have advanced the field of nature photography, with some branching out to become astrophotographers, documenting celestial events such as eclipses and meteor showers. The keenest have gone even further and captured nebulas and star clusters.

Many medieval Muslim scholars made huge contributions to astronomy — from Ibn Yunus’ successful attempts in correcting historic Greek calculations of planetary movements to Abd Al-Rahman Al-Sufi, who was the first astronomer to observe the Andromeda Galaxy and Large Magellanic Cloud.

Anas Al-Majed, an avid astrophotographer based in Riyadh, bought his first telescope seven years ago and was able to view the moon’s mountains and craters as well as neighboring gas giants, Jupiter and Saturn, in fine detail.

“I was awestruck with how detailed everything was, like Saturn’s rings and Jupiter’s gaseous bands. With time, I upgraded from a simple telescope to a Dobsonian 8-inch, where I delved into discovering deep-sky objects, starting with the Andromeda Galaxy and Orion’s Nebula,” Al-Majed told Arab News. “As a photographer, I wanted to know more and continue discovering, and again, upgraded to a refractor with an equatorial mount for my camera, which brought simple results.”

But the photographer still needed more, as he wanted to capture images of the sleeping giants in bright detail, and he soon bought a camera with features that suited deep astrophotography. The result was surprising and magnificent.

“The refractor’s lens is the closest to a camera lens, my first love. Maintaining the refractor telescope doesn’t take much effort and it can handle the tough terrain unlike other telescopes,” he said.

Although an expensive hobby, turning to international sites means cheaper prices for proper equipment and telescopes, which many say are expensive in the Kingdom.

Al-Majed said the field is still young and there is more room for exploration, but warned that it takes time, practice, and patience to achieve optimal results.

With seven years of experience, he is still keen to find more deep space objects to photograph. “It’s the challenge that’s exciting. The Bubble Nebula is very difficult to photograph due to its distance and the Veil Nebula is a strange and beautiful object. There are still many deep space objects to find and I can head out of Riyadh and search.”

FASTFACTS

• Some of the constellations that can be viewed with the naked eye during autumn above the Saudi deserts include Cassiopeia, Ursa Major, and Minor, Crux, and Draco.

• Planets such as Venus, Saturn, Jupiter also shine bright, but it is Mars in opposition that steals the show this time of year.

The Kingdom is ideal for stargazers and astrophotographers, but few know where or how to watch one of nature’s most striking sights in all its glory — the Milky Way Galaxy.

With proper research and by selecting the right time and place, the Milky Way’s core can be seen rising during the country’s summer months and disappearing toward the Southern Equatorial Belt.

Huda Alerwy, a Jeddah-based photographer, went on a hiking trip in April 2019 and camped off the edge of the Wahba Crater, a volcanic crater located 250 km from Taif. There she witnessed the Milky Way galaxy’s rise above the horizon for the first time in her life.

Fortunately, there are apps that people can use to reach areas with relatively clean and stable air to make the viewing of stars sharp and clear.

Mohammed Jan

“The scene was mesmerizing. We started to see the glow of the belt at 2 a.m. and I had the chance to capture the moment,” Alerwy told Arab News. “We spent more than an hour photographing its rise and if I get the chance to relive that experience again, I’ll do it with no hesitation.”

With her tripod in tow, she was able to ensure that her camera was stable enough to withstand any wind gusts and stabilize it for a clear shot.

Some of the constellations that can be viewed with the naked eye during autumn above the Saudi deserts include Cassiopeia, Ursa Major, and Minor, Crux, and Draco. Planets such as Venus, Saturn, Jupiter also shine bright, but it is Mars in opposition that steals the show this time of year.

For casual stargazers in many parts of the Kingdom, the stars have been further away, photographer Mohammed Jan told Arab News. “Many Saudis can’t see the Milky Way where they live, or many stars for that matter, due to light pollution. They’d have to drive for hundreds of miles outside city limits to get away from it.

“Fortunately, there are apps that people can use to reach areas with relatively clean and stable air to make the viewing of stars sharp and clear for both stargazers or photography enthusiasts alike,” he added.

Obsessed with astrophysics and space for years, Jan captured his first glimpse of the Milky Way in 2014 and soon became more knowledgeable in the field. He often drives for hours just to make sure he is away from any light pollution.

“There are different apps that you can use to make sure that you’re in the right area. Large cities such as Makkah and Jeddah are within Zone 9 and barely feature any stars. For optimal viewing and astrophotography, you’ll need to be in an area less than a Zone 4,” he added.

With time, Jan grew used to capturing celestial objects, but soon ventured into new territory — nebulas and deep-sky objects.

“The Helix Nebula has always captured my interest. The planetary nebula was and has always been my favorite object to photograph in the dark skies,” said Jan, repeating Al-Majed’s warning that it is through time, practice, and effort that he was able to reach his level of expertise. Jan is looking forward to doing better but has called for greater community support for astrophotography.

“Not many understand what we do and why we do it. It’s educational, it’s knowledge and its understanding,” he said.