Monetary losses suffered from cryptocurrency crimes soared last year despite a drop in the number of crypto-related hacking incidents.

That’s according to the latest cryptocurrency anti-money laundering (AML) report from blockchain forensics firm CipherTrace, which claims that the total losses from cryptocurrency thefts and frauds in 2019 increased by 160 per cent to $4.52 billion, from about $1.74 billion in 2018.

This includes $4.1 billion loss from frauds and misappropriation of funds and $370.7 million loss from exchange thefts and hacks.

Total losses from cryptocurrency thefts and frauds in 2019 increased by 160 per cent to $4.52 billion, from about $1.74 billion in 2018

“If crypto crime had a Person of the Year in 2019, it clearly would have been The Malicious Insider,” CipherTrace stated in its report.

“Exchange hacks and other forms of outright larceny have driven headlines of user losses in previous years. However, 2019 was dominated by Ponzi schemes, exit scams, and other forms of cryptocurrency financial fraud,” it added.

Dave Jevans, CipherTrace chief executive, claimed that CipherTrace noticed a significant increase in the number of incidents where malicious insiders scammed incautious victims or preyed on their users via Ponzi schemes.

Two massive frauds in the first three months of 2019 were the main reasons behind the increase in total losses, CipherTrace said.

Customers and users lost about $3 billion from PlusToken, a Ponzi scheme that acted as a crypto wallet and exchange service.

Another major loss was $135 million occurring due to the unexpected death of the co-founder of Canadian crypto exchange QuadrigaCX, who was supposedly the only person who held the private keys of clients’ cryptocurrency funds.

CipherTrace said the losses from scams and fraud could have been higher had it included two widely publicised financial frauds in its report.

The frauds – BitClub and OneCoin – were left out as they did not involve either the actual release of tokens, blockchains or ICOs.

And it is not only the crypto industry that is incurring financial losses as a result of increased criminal activity. The typical top ten US banks inadvertently facilitate roughly $2 billion in illicit cryptocurrency transactions each year, CipherTrace added.

While banks paid over $6.2 billion in anti-money laundering fines last year, the number is expected to increase following the introduction of the Travel Rule in June 2020.