Untill now, the world has lost over six billion dollars due to crypto hacks.
To give you a perspective, it is more than the combined GDP of 6 African nations and is over the cost of 30,000 Lamborghinis.
So, if you are a crypto investor and want to become a crypto millionaire, you should be aware of these crypto hacks and take measures to be cautious.
But how to be cautious?
Well, we will discuss that in the end.
So let’s dive into the world’s top 10 crypto/Bitcoin exchange hacks:
Biggest Bitcoin (BTC) & Cryptocurrency Exchange Hacks
One of the worst and initial Bitcoin exchange hack took place at Mt.Gox. A Japan-based crypto-exchange founded in 2010 by Jed McCaleb (current CTO of Steller), was attacked by hackers, who took controls over the private keys, in 2011. Over 2000 BTC were lost in this hack.
Again Mt.Gox was attacked in 2014 with much grave impact as Mt.Gox was processing around 70% of total BTC transactions and more than 750,000 BTC were lost in a few minutes. This accounts for 7% of total BTC at that time.
Total estimated loss was more than 450 million dollars, and no funds were recovered or refunded to investors. Due to this crypto community not only lost faith in BTC but also saw a drastic drop in the price of BTC.
Again a Japan-based exchange was targeted by hackers known as Coincheck.
In January 2018, the world not only saw the biggest crypto hack but world biggest heist ever !!!!!.
Over 500 million dollars was stolen in the form of NEM token in this incident, and all the amount was routed to 19 different accounts. In the exchanges had red-flagged all the 19 accounts to prevent attackers from selling these tokens.
This was due to the usage of hot wallets which are always connected to the internet and relatively easy to hack. Otherwise, usually, crypto exchanges use cold wallets which are way more secure than hot wallets.
Fortunately, Coincheck will be re-paying all the stolen amount in the form of Japanese Yen. Aftermath has caught the attention of Japanese authority and security commission which has made strong regulation for exchanges in Japan.
World’s third-worst crypto hack happened in an Italian crypto-exchange called Bitgrail, founded by Francesco Firano. Over 195 million dollars were lost in the form of 17 million NANO tokens in this incident.
But this hack is by far most controversial, with the allegation on both Firano that he mishandled the funds & overlooked security measures. This NANO hack has been called scam by some people. In January 2019, the Italian court convicted Firano and Bitgrail for security flaws and loopholes in the system. Also, court-ordered Firano to pay back as much as possible to all the investors who have lost funds in the hack.
It was a scam or hack we don’t know but with assurance from the Italian government all investors are at ease.
Even the biggest exchanges are not safe from hackers, and this became evident by the Bitfinex Hack.
After Mt.Gox this was the largest hack in terms of BTC. Over 120,000 BTC were stolen worth 65 million dollars. Due to this crypto-community was devastated and discouraged as much of the value of BTC was lost due to this incident.
Bitfinex assured a high level of security by introducing the multi-signature platform, but in spite of the high level of security, the platform was compromised and became a honey pot for the hackers.
In result, Bitfinex refunded all the investor who lost funds in the hack. This hack not only affected the traders and investors who lost funds but the whole crypto ecosystem, due to this hack BTC lost 20% of its value in a few hours.
Bitstamp was targeted using social engineering techniques. Hackers contacted Bitstamp employees and made them download a malicious file which led the entry point for the hack.
Over 19,000 BTC were poached worth 5 million dollars at that time. But Bitstamp responded quickly, published a notice regarding the breach and mitigated the affected area and files in the system.
As time passed by Bitstamp regained user’s trust and is running smoothly.
Yet another Japan-based crypto-exchanged faced the music from hackers in one of the recent hacks. Zaif lost not only BTC but BCH and Monacoin too, which includes more than 5900 BTC. Total loss was about 66 million dollars.
To cope with the loss, Zaif has made a deal with the financial firm called Fisco for 44.5 million dollars instead of having 20 million dollars in reserve. The deal resulted in a shift of ownership and gave Fisco the ownership of Zaif.
Termed as one of the easiest crypto-exchange hacks after Mt.Gox is Poloniex hack.
Poloniex suffered a hack due to a loosely written withdrawal code. Hacker easily exploited the code which caused the loss of 12.3% of its total BTC.
The situation was taken under control by Poloniex, and all the accounts were reduced to 12.3% as a measure to refund those who lost the money in the hack.
Tristan D’Agosta owner of Poloniex publicly came forward and explained the situation.
All the investors who lost fund in hack were refunded. Bitcoin talk community responded positively and welcomed the measures by Poloniex. Today, Poloniex is running smoothly with full throttle.
BitFloor was fourth largest crypto-exchange when it was hacked in 2012. Bitfloor majorly deals with USD to BTC exchange. Bitfloor was compromised during a manual upgrade as conveyed by Roman Shtylman(CEO of Bitfloor).
Total loss was of 24,000 BTC which was considered small at that time, but today 24,000 BTC is a different ball game. Roman Shtylman released a statement after the hack:
Bitfloor refunded all the investors who lost the funds in Hack.
Cryptsy, one of the most active exchanges was breached in 2015, which resulted in the loss of over 13,000 BTCs and 300,00 LTCs worth over 10 million dollars.
It was suspected that a developer in the enterprise placed a trojan in the code which gives him control over the servers.
People also accused the owner of Cryptsy – Paul Vern. A trial was carried out, and the court convicted Paul, ordered him to pay 8.2 million but before the verdict paul vanished.
Now Cryptsy is dissolved and insolvent.
Bitcoinica is the worst victim of crypto-hacks as it was not hacked one-time but atleast three times. 17-year-old Zhou Tong started Bitcoinica as an ambitious project that turned into a nightmare.
Bitcoinica was first hacked due to a breach in the cloud service Linode where the website was hosted. It was suspected that the employee in Linode was behind the hack, but the hacker was never caught.
A few weeks later again Bitcoinica was again hacked in the same way as the previous hack, just the server host was different, i.e., Rackspace. Several servers were compromised where currencies were stored.
In total Bitcoinica lost 650,000 Dollars and not a single penny was refunded to the users
Conclusion: Bitcoin & Crypto Exchange Hacks 2018-2019
The moral of today’s crypto hack story is:
Not Your Keys, Not Your Coins
All these exchanges might be good for buying Bitcoin and cryptocurrencies, but they are certainly not good for storing your currencies.
That’s why one needs to rely only on hardware wallets where they control their private keys and not even trust software wallets because they often go online.
Also, these hack incidents not only cause financial loss to investors but de-values crypto markets whenever a hack takes place. Over the years the crypto community have faced a lot of ups and down due to the hacks but have always emerged strongly in the end
With a positive perspective, every hack has benefited the crypto community as with loopholes being discovered in exchanges community members are becoming more educated and exchanges too, are upping their security measures.
Government agencies and regulators have also stepped in and passed regulations which exchanges have to follow.
As an investor, you have to assess the crypto exchanges before putting your hard earned money.
I hope you enjoyed this post and learned about crypto hacks. If you did? Please do share !!!!