NEW YORK (Reuters) – Cryptocurrencies stolen from exchanges and scammed from investors surged more than 400 percent in 2018 to around $1.7 billion, according to a report from U.S.-based cyber security firm CipherTrace released on Tuesday.

Of the $1.7 billion, the report, which looks at criminal activity in the digital currency market, said $950 million constituted thefts from cryptocurrency exchanges and infrastructure services such as wallets, up nearly 260 percent from $266 million in 2017.

Korea and Japan were home to most of the thefts from exchanges, or 58 percent, throughout 2018.

The numbers on crypto theft surprised many observers given the price declines in digital currencies in 2018. The market capitalization with more than 1,600 digital currencies was $112 billion in January, 2019, down more than 80 percent from its peak a year earlier.

In addition to those thefts, the research found that investors and exchange users lost about $725 million in cryptocurrency in 2018 to exit scams such as fraudulent initial coin offerings, phony exchange hacks, and Ponzi schemes.

In 2017, the exit scams totaled just $56 million, according to CipherTrace.

“These numbers only represent the loot from crypto crimes that CipherTrace can validate; we have little doubt that the true number of crypto asset losses is much larger,” the cybersecurity firm said in the report.

Whereas in the first three quarters, thefts by hackers dominated the crypto crime scene, the fourth quarter was mostly about inside jobs or fraud, CipherTrace said.

“We have been seeing new types of crimes that involve money laundering,” said Dave Jevans, chief executive officer of CipherTrace, told Reuters in an interview.

Jevans is also the chairman of the Anti-Phishing Working Group, a global organization that aims to help solve cyber crime.

“So we have seen in 2018 a lot more exit scams where companies disappear and steal people’s money. There’s huge increase in that,” he added.

Jevans noted that in all likelihood the bulk of the $1.7 billion in stolen and scammed cryptocurrencies has already been laundered.

“These bad actors are clearly flocking to jurisdictions with weak AML (anti-money laundering) and know-your-customer (KYC) regimes, because in our Q3 report we published the results of research showing 97 percent of criminal bitcoin flows into unregulated cryptocurrency exchanges,” the CipherTrace report said.

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