The destabilising effects of cryptocurrency cybercriminality

Abstract

This paper investigates the financial market effects of recent cybercriminality in cryptocurrency markets. Hacking events are found to increase both the price volatility of the targeted cryptocurrency and broad cross-cryptocurrency correlations. Further, cybercrime events significantly reduce price discovery sourced within the hacked currency relative to other cryptocurrencies. Finally, abnormal returns in the hours prior to the cybercrime event, revert to zero when news is publicly announced.

Global drivers of cryptocurrency infrastructure adoption

“…On the other hand, our results may be seen as fuel for a broader discussion about the role of cryptocurrencies. While clearly potentially helpful for citizens of countries beset by hyperinflation, evidence on the strong connection to illicit activity and the, as of yet, unrealized promise of providing a means to increase financial inclusion would seem to weigh in with arguments that the cryptocurrency's growth is to be seen as cause for concern-e.g., in the light of price manipulation (Griffin and Shams 2019), heavy electricity use associated with Bitcoin mining (Krause and Tolaymat 2018) and the increased occurrence of cybercrimes and frauds involving cryptocurrencies (Corbet et al 2019;Kamps and Kleinberg 2018;Li et al 2018;Su 2019).…”

Asymmetric nexus between COVID-19 outbreak in the world and cryptocurrency market

“…The need for a contactless payment system and replacement of the paper money is never felt more before now. However, the lack of regulatory control and a possible major digital hack are only a few among the many concerns associated with the wide-spread usage of such forms of digital payments ( Corbet et al, 2019 , Corbet, Cumming, et al, 2020a ). Pertaining to the high complexity associated with the operational mechanism of this market, it is difficult to assess the market efficiency with confidence.…”

A Cryptocurrency Spectrum Short Analysis

“…In 2019, Corbet et al (2019) mentioned cryptocurrencies as a financial asset. The paper presented a review of the literature from an empirical point of view of the aspects associated with cryptocurrency as a financial asset, since its appearance.…”

“…Moreover, a particularly interesting study, already cited in the literature review (Corbet et al 2019), draws attention to the increasing volatility of cryptocurrencies during periods of stress to the detriment of yield stability. The authors tried to highlight the destabilizing effects of cybercrime, the different ways in which quotations are affected, and the impact felt on prices.…”