Oh, if I had just bought that Bitcoin when I first thought about it a decade ago…I might risk a flight to Fiji right now, which is on my bucket list, even in the midst of the pandemic. Alas, I didn’t, because I assessed the risk first and made my own decision. Yes, I lost out on tremendous profits, but hey, I love my job and Fiji will be there for me, and it was the right decision for me.
The urge to purchase cryptocurrency is strong right now as the value has skyrocketed. Nonetheless, before purchasing any type of cryptocurrency, there are a couple of things you may wish to consider.
My mantra these days is “Yes, you, me, and all of us collectively are being targeted by state sponsored hackers”–mostly from Russia, China and North Korea. Their methods are similar and sinister, and their goals the same—profit, power and domination.
North Korea is stealing cryptocurrency at an alarming rate, the goal of which is to fund its nuclear and ballistic missile programs in the face of tough international sanctions. It is estimated by the United Nations (U.N.) that North Korean state-sponsored hackers stole approximately $316.4M in virtual assets from digital currency exchanges between 2019 and November of 2020. U.N. monitors report that North Korea has generated approximately $2 billion to steal funds from banks and cryptocurrency exchanges using sophisticated cyberattacks.
One of the largest thefts that North Korea is believed to be behind was against cryptocurrency exchange KuCoin, which reported the theft of $281 million in bitcoin and other crypto tokens in September of 2020. (This has not been confirmed by KuCoin, but KuCoin has publicly stated that it is working with law enforcement to confirm who was behind the incident). It is reported that KuCoin was able to recover 80 percent of the stolen funds through cooperation with other exchanges that froze the funds that the hackers were attempting to launder.
Some things to consider before jumping into the cryptocurrency frenzy:
Cryptocurrency exchanges are not regulated like other financial institutions.
The United States Federal Reserve does not back any loss of funds in cryptocurrency exchanges.
If you pass away and have assets in cryptocurrency, or lose your password to your crypto wallet, those funds could be lost; treat the account like any other and protect it should you pass away, just as you would with any other account—planning is really important here.
Just because you have invested in digital assets, they are still considered assets by the IRS, so be aware of tax laws applicable to cryptocurrency.
Cryptocurrency exchanges have gone out of business with no recourse for investors, so researching them like any other investment, including their, is prudent.
Be aware that state-sponsored attackers, particularly North Korea, are fervently and successfully targeting cryptocurrency exchanges to fund their nuclear capabilities against adverse nations, including the United States, which affects our national security.
Following the recent report by U.N. monitors in relation to the current hype of Bitcoin, these are just a few considerations before investing in cryptocurrency. Enter that market slowly and research risk while contemplating reward.
Copyright © 2020 Robinson & Cole LLP. All rights reserved.National Law Review, Volume XI, Number 42