The history of cryptocurrencies and the chain of blocks has been marked by crypto heists. This high incidence of cryptocurrency theft has resulted in a slow rate of adoption of digital assets, both fungible and non-fungible. Examples of the best heists of all time include the Poly Network, KuCoin, Coincheck and MT.GOX, Ronin Network, Wormhole and FTX. Before we discuss these heists, let’s explain the reasons for the rise in cryptocurrency thefts.
Why is cryptocurrency theft increasing?
The number of crypto hacks has been on the rise over the years, resulting in millions of dollars worth of cryptocurrency being lost. There are several reasons for this trend, including the rising value of cryptocurrencies, a lack of regulations, and the rise of hacker syndicates.
There are many ways to steal cryptocurrency
The increase in the ways that malicious actors can steal from people and projects, such as exchanges, is contributing to the rise in cases of cryptocurrency theft. Although hacking is the primary means of stealing cryptocurrency, there are other methods that attackers can use. These include phishing, malware, sim swapping, private key theft, exploiting wallet vulnerabilities, and fraudulent investment schemes.
Many people are not familiar with cryptocurrencies
There are many people who invest in cryptocurrencies because they anticipate high returns but do not have extensive knowledge of how they work. Such a lack of knowledge leads people to make mistakes that allow cybercriminals to steal from them. For example, some people may give their seed phrases or private keys to others when they seek help processing certain transactions or navigating certain platforms.
Lack of regulations governing cryptocurrencies
Currently, there are no regulations governing cryptocurrencies in many countries. This lack of legislation makes it difficult for governments to track down cybercriminals who steal cryptocurrency and other digital assets. This is the other reason why criminals operate without much fear.
Criminals are more organized than before
Some of the criminals behind cryptocurrency heists are now organized into corporation-like structures, with physical offices and affiliate programs. The methods and technologies they use are also more advanced than before.
The 7 biggest robberies of all time
The cryptocurrency sector began to experience cryptocurrency theft since 2014, when the first major heist took place, that of mt gox. However, other crypto thefts followed including the KuCoin, Poly Network, Coincheck, Ronin Network, Wormhole, and FTX hacks. Let’s take a brief look at these cryptocurrency heists.
Poly Network – $610 million
Poly Network, a cross-chain network, which was exploited on August 10, 2021, lost $610 million worth of cryptocurrency. However, the cryptocurrencies later recovered when they traded with the hacker. In the case of the Poly Network, hackers exploited a vulnerability found in the network.
After the hack, the Poly Network took to Twitter to ask the hacker to return the cryptocurrency. Surprisingly, the person responded and promised to return the cryptocurrency. As a result, he returned the cryptocurrencies in small batches.
The mastermind behind the heist said his purpose in hacking the network was not to steal the cryptocurrency but to show that there was a vulnerability. In the end, Poly Network gave the hacker a $500,000 reward and invited him to become their security consultant.
KuCoin – $281 million
The next largest cryptocurrency theft involved KuCoin and took place in September 2020, where the malicious actor stole $281 million worth of cryptocurrency. In this case, the hackers got hold of the private keys of the hot wallets and drained large amounts of different cryptocurrencies including Ether (ETH), Stellar Lumens (XLM), TRON (TRX), Bitcoin (BTC), Bitcoin SV ( BSV). ), Litecoin (LTC), XRP (XRP) and Tether (USDT).
The indication is that an insider was involved in the hacking incident, though he/she would have cooperated with some outsiders. Based on the way the hacking incident unfolded, experts believe that it was North Korean hacking group Lazarus who masterminded the heist. However, KuCoin was able to recover most of the stolen cryptocurrencies.
CoinCheck – $532 million
One of the biggest thefts involved CoinCheck, where hackers stole $532 million. Clearly, this attack was the result of a malware infection on their computers that allowed malicious actors to access the exchange’s private keys. The malware was most likely sent via phishing emails.
The hackers stole the NEM tokens that were managed through hot wallets. Later, the malicious actors sold the NEM on the dark markets, causing the price to drop sharply. As a result of the huge loss, the exchange suspended its operations and promised to compensate the victims of the theft.
Mt. Gox – $416 million
Mt Gox, which used to do more than 70% of transactions in 2014, was hacked and lost $416 million worth of Bitcoin. The main cause of one of the biggest Bitcoin heists was poorly written code that had some vulnerability. In general, Mt Gox’s security system was very poor as it suffered several attacks after its creation in 2011.
What is surprising is that cybercriminals were able to steal Bitcoin from both hot and cold wallets. In total, the hackers stole 100,000 BTC from Mt.Gox wallets and 750,000 from its users’ wallets. The exchange eventually shut down after only recovering 200,000 BTC. The rest of the stolen Bitcoin was not accounted for.
Red Ronin – $615 million
Another major exploit took place in March 2022 when attackers stole $615 million worth of cryptocurrency from the Ronin Network, an exchange that enabled the trading of Axie Infinity’s in-game assets. In fact, holders of in-game assets could exchange them for cryptocurrency on this exchange.
In March, the Ronin Network reported that some attackers had stolen their private keys and managed to siphon 173,600 Ethereum and 25.5 million USDC to their wallets. The hack was only noticed when a user was unable to access their cryptocurrency. The biggest suspect in this hack is North Korea’s notorious Lazarus Group.
Wormhole – $326 million
On February 2, 2022, the security of the Wormhole, a blockchain bridge between the Solana and DeFi protocols that exist on the Ethereum blockchain, was compromised, resulting in the loss of thousands of cryptocurrencies.
Basically, the attackers capitalized on a signature verification vulnerability that existed in the cross-chain bridge to mint and withdraw 120,000 wrapped ETH (wETH) worth $326 million without posting the required collateral. The effort to recover the stolen tokens was unsuccessful.
FTX – $477 million
FTX, which was one of the top cryptocurrency exchanges, lost over $477 million worth of cryptocurrency the day it filed for bankruptcy. The hackers extracted the cryptocurrencies from their wallets and those of their users.
In response, the exchange moved the remaining cryptocurrencies from its wallets. However, he claimed that he recovered most of the stolen goods.
How to avoid cryptocurrency scams
Currently, there are many cryptocurrency scams that occur from time to time. Therefore, cryptocurrency holders should know how to protect themselves from scammers. Let’s briefly discuss how you can do that.
Choosing a trustworthy cryptocurrency exchange: a secure cryptocurrency exchange with a clear flow of funds, such as gate.io, is very important for investors. The cryptography and the financial protection behind it are closely related to the investor account and the platform account.
Two-factor authentication: it is important to use two-factor authentication on cryptocurrency exchanges and DeFi platforms. This is because 2FA adds another layer of protection to your account and digital assets. In this case, you receive a code each time you need to make a withdrawal from your account.
Use an authenticator app: It’s also important to use a Google authenticator app for your account. Since you install the app on your phone, there is no way for the attacker to access it. The malicious actor can only withdraw your cryptocurrency if they get hold of your phone.
Use hardware wallets: Hardware wallets are the most secure means of managing your cryptocurrencies. So instead of keeping cryptocurrencies on the exchange, withdraw them to your cold wallets. It is very difficult for hackers to access your hard wallet as you are offline most of the time.
Use of strong passwords: it is better to use strong passwords that are very difficult for hackers to crack. Generally, a strong password must be at least eight characters long, comprising one or more uppercase letters, lowercase letters, special characters, and numeric figures.
Use genuine apps: a frequent cause of cryptocurrency scams is the installation of fake applications, such as desktop wallets. Therefore, the user must download the applications from the correct websites or use the correct LINKS. For example, there are fake MetaMask apps and crypto project websites.
Never share your seed phrases and private keys: private keys and seed phrases are important to protect your cryptocurrency. So please do not share any of these because anyone with them can withdraw your digital assets.
Do not open unrecognized email files: many hackers and other malicious actors send files that have malicious malware via emails. If you open a file in your email with such malware, it can infect your computer or smartphone. This will allow hackers to steal your private key or seed phrase.
Cryptocurrency adoption has been largely hampered by recurring hacking incidents. The world has already witnessed a dozen crypto thefts including Poly Network, KuCoin, Coincheck and MT.GOX, Ronin Network, Wormhole and FTX. In addition to hacks, there are different types of scams that result in the loss of our digital assets.
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