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Crypto intelligence company CipherTrace, which started tracking cryptocurrency crime a few years ago, said it has started to see coronavirus-related frauds that require some form of digital currency payment.

Losses from cryptocurrency thefts, hacks, and frauds soared to nearly $1.4 billion from the beginning of the year until the end of May, a report from CipherTrace showed.

The proportion traced to coronavirus fraud involving cryptocurrencies for the first five months of the year was minimal, CipherTrace said, but it did not give a specific figure.

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This year’s crypto crime is on track to be the second largest on record after last year’s $4.5 billion in losses.

“Consumers, investors, and users continue to adopt cryptocurrency at a massive rate and it is by far the fastest-growing payment system on the planet,” Dave Jevans, CipherTrace chief executive officer, told Reuters.

“At one trillion dollars in annual payments, cryptocurrency payments have grown from zero to 7 per cent in 10 years, making this volume of funds attractive to bad actors,” he added.

Coronavirus-inspired fraud generally took place by luring victims off legitimate platforms into chat rooms where payment in bitcoin can be requested, CipherTrace said in the report.

COVID-19 fraud has also taken the form of impersonating legitimate entities such as The Red Cross to extract personal information and payment in cryptocurrencies, applications that claim to support victims but are actually spying on users, as well as the sale of bogus personal protective equipment, supposed treatments, and testing kits.

Though the majority of COVID-19-related products advertised on darknet markets did not result in many sales, these markets sold coronavirus phishing kits quite successfully, CipherTrace said.

The largest contributor to crypto losses this year was the $1 billion Ponzi scheme by Wotoken in China, the extent of which came out last month in a criminal trial, according to the CipherTrace report.

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The Wotoken scheme offered investors the chance to generate returns for users by employing algorithmic trading bots, offering referral commissions to affiliates, news reports said. However, the advertised proprietary trading software did not exist.

The CipherTrace report also released findings showing that for the third year in row, Finnish exchanges in 2019 received the highest number of bitcoins that were supposed to have come from criminal sources. Some 12.01 per cent of tainted bitcoins went through their trading platforms last year.

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