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.”


Google enters battle for cloud gaming market

Updated 17 November 2019

Google enters battle for cloud gaming market

SAN FRANCISCO, California: Ever-expanding Google becomes a gaming company Tuesday with the launch of its Stadia cloud service that lets people play console-quality video games on a web browser or smartphone.
The Internet giant hopes to break into the global video game industry expected to top $150 billion this year, with cloud technology that could broaden audiences attracted by rich new features as well as ease of access with no more need for consoles.
But analysts say Stadia’s outlook is uncertain as its faces rivals such as PlayStation Now in an emerging and highly-competitive market.
Stadia plays into a trend in which content — ranging from blockbuster films to work projects — lives in the cloud and is accessible from any device.
“All of these new services are merely pointing out that we don’t need sophisticated hardware in the home to access entertainment,” said Wedbush Securities equity research managing director Michael Pachter.
Google last month sold out of “Founder’s Edition” kits, which are priced at $129.
Each kit contains a Stadia controller and a pendant-shaped Chromecast Ultra wireless connection device that plugs into television sets.
Stadia games are playable using Google Chrome web browser software on computers.
It also works with Google-made Pixel smartphones from the second-generation onward, and on televisions.
Stadia Pro subscriptions, priced at $10 a month in the US, will be available in 14 countries in North America and Europe.

'Underwhelming'
However, analysts say Stadia could wind up as another “bet” that Google walks away from if it fails to live up to expectations.
“Stadia will live or die by its content,” said Ovum senior analyst George Jijiashvili.
“The announced 12 launch titles are underwhelming.”
Subscribers will be able to buy games that will be hosted at Google data-centers, but some free games will be available to subscribers, starting with “Destiny 2: The Collection.”
Stadia on smartphones will work with WiFi connections rather than rely on mobile telecom services.
Being able to play without lags or interruptions is paramount to gamers, and flawed Internet connections could cause frustration. Internet speed will also determine how rich in-game graphics can be.
Some promised features such as integration with YouTube will not be in place at launch.
“Stadia appears to be rushed out the door before fully ready and, worryingly, Google is risking falling short on its promises,” Jijiashvili said.
“These shortcomings however would be easily overlooked if Google can deliver a very reliable and high-quality game streaming service.”
Google appears committed to doing just that, according to Ubisoft senior vice president of partnerships Chris Early.
The French video game giant has been working with Google and its games are among titles coming to the service.
“From what I have seen, their plans are too deep; they are too good, and they are too invested,” Early said. “They are not calling it quits any time soon.”
He expects a long launch period during which Google will beef up Stadia.
“If there is a one-day problem at launch, it isn’t the end of the world; it isn’t even close,” he said, stressing the potential for Stadia to let people play without investing in consoles.
But Pachter questioned whether subscriptions were the right approach.
“The right model is pay as you go or pay for the game and play unlimited without a subscription,” Pachter said.
“Amazon will try one of those and will win the streaming wars.”
Amazon has game studios but no online game service.

Project xCloud
US technology veteran Microsoft has been testing a Project xCloud online game platform.
“Next year, we’ll bring Project xCloud to Windows PCs, and are collaborating with a broad set of partners to make game streaming available on other devices as well,” Microsoft corporate vice president Kareem Choudhry said in an online post.
Sony Interactive Entertainment last month slashed the price of its PlayStation Now cloud video game service by about half in the US to $10 monthly.
Japan-based Sony also boosted the library of games that PlayStation Now users can access through its consoles or on personal computers powered by Windows software.
Sony and Microsoft are also poised to release new-generation video game consoles next year.
“While we expect dedicated consoles to eventually lose relevance in the face of cloud gaming services, there’s no guarantee that it will be Google’s service — rather than Sony and Microsoft’s — that catalyzes this trend,” said Ovum senior analyst Matthew Bailey.