Cryptoforhealth Twitter Scam exposes the benefits of cryptocurrency, not the flaws
Bitcoin tends to get a bad wrap and has ever since its inception. It’s a useful headline for the media, doom mongers and legacy protectors that always have a go. The truth is that the scale of this activity in the cryptocurrency space pales in significance compared to the multi billion dollars scammed everyday from bank accounts, credit cards, identity theft etc. The reason City PM and I got together to deliver you Crypto AM was to share what we learn about the space and this is the right occasion to defend the nascent industry.
This hack feels very different, the real issue is the fact that Twitter – it appears with the complicity of a rogue employee – was hacked and only the coveted blue tick verified account holders were targeted.
Brad Garlinghouse, CEO of Ripple, tweeted ‘Seems there is finally consensus across the board that this hack is NOT a crypto problem, this is a social media platform problem. Malicious scams on Twitter, YouTube and others have persisted for years without these platforms taking any real action or accountability to address the issue with more than a band-aid.’
In the AI space CTO of Fetch.ai Toby Simpson tweeted ‘We’ve got Twitter to thank for a highly effective demonstration of why decentralisation is so important. In a centralised world, break into one place, compromise everyone. With decentralisation, where individuals own and control their digital identity, that isn’t possible.’
Changpeng Zhao ‘CZ’ one of those affected by the hack tweeted once his account was restored:- “Bitcoin hack?” No, bitcoin didn’t get hacked. The hackers want bitcoin, because it’s valuable. When bank robbers want cash, it’s not called a “cash robbery”. It’s a bank robbery. “Bitcoin scam?” No, bitcoin didn’t scam anyone. Do we have to explain this every time? “Twitter hack?” Yes. But this incident highlights a bigger issue. With the increased #crypto adoption, existing social and internet platforms need to revamp their security. Internet platforms are no longer just for selfies, it is used to transfer value.
This situation should not be used to be critical of the cryptocurrency industry, as the above statement shows it has actually once again shown the benefits of this technology. Not only does its applications distribute risk but in cases where funds are tied to nefarious actions the capability to conduct anti money laundering and forensic investigations far exceeds what’s capable in the traditional financial industry.
We’ve collaborated with an industry leader in this segment before, Coinfirm, who provides analytics, investigatory and Anti Money Laundering solutions to some of the biggest companies in the space. Currently the AML effectiveness in the traditional financial industry sits at about 2% while solutions such as Coinfirm for blockchain assets take that effectiveness into the 90 percentiles, dispelling many of the fears and borders to adoption around cryptocurrencies. Taking a look at the recent Twitter hack related scams using Coinfirm’s technology, cryptocurrencies such as bitcoin provide a whole new level of transparency and data analysis due to its inherent nature and turns AML into a real-time, automated, and effective process.
The first visualization shows the connection between the two addresses along with the funds coming in from victims. Approx $1 600 went to bc1q0kznuxzk6d82e27p7gplwl68zkv40swyy4d24x (Address A) that was used in the Cash App related scam. Approx $117 000 worth of BTC at the time of analysis went to bc1qxy2kgdygjrsqtzq2n0yrf2493p83kkfjhx0wlh (Address B) that was used in the Elon Musk, Bill Gates and Uber scams among others.
Address A sent it’s funds to address B from where address B began sending the funds to a variety of addresses where they currently sit. The address with the largest amount sitting is 1Ai52Uw6usjhpcDrwSmkUvjuqLpcznUuyF with approximately $52,000 worth of BTC. Now, any entity using Coinfirm’s Platform will be able to analyze and catch any transaction entering their ecosystems that are related to this scam and act appropriately, further protecting the integrity and security of the crypto economy
Even scams that use the “get rich” communication around bitcoin mixed with fake celebrity statements and other lies using the identity of celebrities to scam victims are actually mainly doing so by accepting credit cards from the victims. This has helped protect these enterprises as the transparency and traceability of these transactions and related funds are unable to be done on the technological level of bitcoin and other popular cryptocurrencies.