Mastercard to Cut Down on Crypto Scams with Software Tool
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Popular payment network MasterCard is looking to combat crypto fraud from malicious actors in the industry. The fintech giant intends to achieve this lofty goal with a sophisticated software called Crypto Secure.
CipherTrace Rolls out Crypto Security Solution
Mastercard announced that it had deployed a fraud-preventing software called Crypto Secure. This is an offering from its security outfit CipherTrace, which was acquired last year. CipherTrace is a blockchain analytics company that focuses on helping government agencies track down illicit funds made from crypto hacks and scams.
Crypto Secure is expected to conduct a risk assessment on over 2,400 crypto exchanges connected to the global payment network’s service. The risk potential of all platforms would be rated according to colors, with high-risk exchanges denoted with the color red and low-risk options signaled with green.
This is not the payment company’s first platform security rodeo, as it already offers the service for fiat-backed currencies. Mastercard would expand an already functioning framework to cryptocurrencies with this new service.
Commenting on the recent release, Mastercard’s President of Cyber and Intelligence Ajay Bhalla said the company aimed to enable the level of trust in digital commerce transactions in crypto. This way, individuals, banks, and merchants can transact in a fraud-free environment regularly.
Bhalla also pointed out that Crypto Secure does not plan to take away users’ freedom as it only looks to give a full diagnosis of the exchanges they interact with. Only the user has the power to make decisions based on the results.
Crypto Scams Are Growing by the Year
Cryptocurrencies are decentralized and do not have a controlling body. This makes them hard to trace and presents a loophole for malicious actors to steal funds easily. With pseudonymity and anonymity fully operational, crypto assets have become a haven for money laundering and terrorism financing.
#ScamAlert: There's a new spin on scammers asking people to pay with #cryptocurrency. It involves an impersonator, a QR code & a trip to a store (directed by a scammer on the phone) to send your money to them through a cryptocurrency ATM. More: https://t.co/PeTno2LASm #crypto
— FTC (@FTC) January 14, 2022
The nascent crypto market has experienced a spate of crypto scams, with recent reports from the Federal Trade Commission (FTC) placing the number of scams in 2021 above $1 billion.
FTC’s latest data spotlight shows that since October 2020, consumers have reported losing more than $80 million to #cryptocurrency investment scams, an increase of more than ten-fold year-over-year #crypto #CryptoNews /2 pic.twitter.com/UVKsPGzPYu
— FTC (@FTC) May 17, 2021
This year has not been better despite a broader market slump. High-profile crypto hacks, like the Ronin chain’s loss of $620 million and Wintermute’s $160 million, are some of the biggest cases government agencies have had to deal with.
The crypto industry has been unable to stop this spate of attacks, largely due to poor system security mechanisms instituted in the decentralized solutions. Chainalysis’ report points to dire straits for the crypto market, with $1.3 billion already stolen and siphoned across crypto tumbling software like Tornado Cash.
Most of the stolen funds are on decentralized finance (DeFi) protocols; they account for 97% of all crypto hacks so far this year.
Growing Penetration of Legacy Systems
With a lot going on in the crypto space, several mainstream investors are on the sidelines. But the situation is rapidly changing as more legacy-based businesses begin offering crypto-based services.
One of the most popular is New York-based institutional service company Nasdaq, which launched its own Crypto Custody Services operation for institutional investors. Elaborating on its service, the company said that it aims to compete in a market segment controlled by the likes of Coinbase, Gemini, and BitGo and aims to build on its strong trading and market surveillance technologies service.
With conventional businesses making the leap, crypto frauds could become a distant idea in the coming years.
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