Cryptocurrencies were supposed to make things a lot more secure for users. They certainly are, but just like everything else, they have been prone to hacker attacks. There have been cases in the past where cryptocurrencies have been obtained through illegal means. Some of the common methods used to steal cryptocurrency include scamming, phishing, hacking and supply chain attack.
As cryptocurrencies are usually transacted on cryptocurrency exchanges, hackers may attempt to find vulnerabilities in the system and target it to obtain cryptocurrency. They may also use malware to take control of people’s personal computers. They can then scan the PC for cryptocurrency holdings and passwords. Some hackers also take advantage of programming bugs that may be there in software systems that manage the ownership and transfer of cryptocurrency.
For better understanding the risks, here’s a quick look at some of the biggest cryptocurrency heists of all time.
NiceHash – This Slovenian based hash power broker was compromised in 2017. The hackers managed to steal 4,700 bitcoins, valued at around USD 64 million. Investigations revealed that hackers had used a spear phishing attack to steal the bitcoins.
Bitfinex – This cryptocurrency exchange was hacked in 2016, wherein 119,756 bitcoins (BTC) were stolen. At that time, it was valued at USD 72 million. It was found that this theft was primarily due to human error and hot wallet security loopholes. The good thing is that the exchange compensated their customers in full.
BitGrail – This Italian cryptocurrency exchange was hacked in 2018. The hackers managed to steal 17 million Nano (XRB) cryptocurrency. It was equivalent to USD 170 million at that time. Later, the exchange was seized by the court and the company’s founder was declared bankrupt.
Mt. Gox – Based in Tokyo, Mt. Gox was once counted among the biggest cryptocurrency exchanges in the world. However, it became bankrupt in 2014. At the time of its liquidation, it was found that 850,000 bitcoins were missing. 750,000 of these belonged to customers whereas 100,000 were of the company itself. Investigations have revealed that the bitcoins were being continuously stolen from Mt. Gox hot cryptocurrency wallet since 2011.
Coincheck – Based in Japan, Coincheck is a leading cryptocurrency wallet and exchange. It was compromised in 2018, where hackers managed to steal 58 billion Japanese Yen (~ USD 532 million) in NEM cryptocurrency. The organization was new at that time and its security systems were not that foolproof. Investigations revealed that hackers had gained entry by injecting a virus into the laptop of one of the company’s employees.
Cryptocurrencies are no doubt a lot safe than conventional currency. However, that should not be a reason to become complacent. Make sure you have the keys (password) only in your mind and not written or stored anywhere. If you plan to use a cryptocurrency exchange, make sure you choose the one that offers the highest level of security.