Bitcoin appeared in 2008-2009, when the world was covered by a wave of economic crisis, as it was stated then, in order to prevent future crises… However, the cryptocurrency did not become an escape from the crisis, and fraudsters, wishing to profit, add risk to owners of digital assets. Most of the funds are placed in digital form and it is easier for hijackers to steal them than real money, and the anonymity of cryptocurrency transfers makes the process even easier, no matter how much is transferred, it can be huge amounts.
1. Mt.Gox
The largest heist in history so far, with roughly 850,000 bitcoins stolen between 2011 and 2014.
Mt.Gox’s locked keys were hacked in 2011 and the company did not conduct an audit to detect the hack. Moreover, bitcoin addresses were reused, and the stolen key set was reused on a regular basis, and by mid-2013, about 630K worth of bitcoins were withdrawn. To minimize losses, many companies are using cold and hot wallets. First, all coins are transferred to the cold wallet, and only from it to the hot wallet manually and in parts. If a hacker hacked into an exchange server, the money he can steal only from the hot wallet.
2. Bitgrail
Bitgrail was a small exchange in Italy and traded the cryptocurrency RailBlocks (now called Nano (XNO). In 2018, the value of Nano rose to $10 and the exchange was hacked and had a loss of $146 million. Had the exchange implemented basic protection in the form of a cold wallet, such losses would have been avoided. The CEO was suspected of aiding and abetting the theft.
3. Coinchek
The Japanese exchange Coinchek was robbed of $530 million in early 2018. That was the amount of NEM ( XEM) and Ripple tokens stolen.
The hackers who hacked the system could never be found. The funds were stored in hot wallets, and the measures taken were not enough to keep them safe.
This was the first large-scale hack and withdrawal of altcoins, not the main cryptocurrency as it happened before. The robbers were interested specifically in coins from the banking sector, which are also competitors. The current capitalization of Ripple is much larger than NEM, as a result NEM suffered much more and the issue of the coin decreased significantly. After its fall NEM recovered very quickly, which means that there was a lot of money invested in this cryptocurrency at the time of correction. Perhaps, the decrease in the number of coins, which means the creation of a deficit and, consequently, a rise in the price, was beneficial for the Japanese banks. Hacks are also profitable for exchanges, which continue to operate after promises to compensate users.
4. The teenager who stole $36 million
This largest theft of cryptocurrency by one person in history happened in Canada, Ontario in March 2020. The man, a U.S. citizen, was attacked with a SIM card swap, a type of fraud whereby another person’s phone number is assigned and it becomes possible to bypass the authentication steps tied to the victim’s phone. The kidnapper was given away by the purchase of a rare game name, where he paid with some of the stolen cryptocurrency.
Cryptocurrency exchanges are often targets of robberies because they cannot cancel debits, unlike banks.
5. PancakeBunny
Popular DeFi protocol PancakeBunny, based on Binance Smart Chain, suffered a surprise credit attack from an external entity. A hacker “borrowed” more than $200 million worth of Binance Coin (BNB) before manipulating the price of the asset and dumping it on the BUNNY/BNB platform.
PancakeBunny is the latest DeFi protocol to undergo an instant credit attack, the exploit program poses a serious threat to the decentralized finance sector.
6. Poly Network
One of the largest thefts of digital tokens, amounting to $600 million.
2,858 Ethereum tokens worth $267 million, 6,610 Binance coins worth $252 million and USDC tokens worth $85 million were taken out.
Poly Network called on blockchain miners and cryptocurrency exchanges to blacklist tokens coming from the kidnappers’ addresses.
The story is interesting because a hacker named White Hat not only maintained a public dialogue with Poly Network, but a week later returned everything he had stolen.
Mr. White Hat subsequently received a cash reward for the return of the stolen goods, which amounted to $500,000. He was also invited to work at Poly Network as a senior security officer.
Ways to protect yourself from scammers.
- To work with crypto-assets, use separate accounts, such as email and phone number, which are not involved in other resources, and do not disclose personal data.
- You must use the maximum set of security features: SMS confirmation, anti-phishing code, two-factor authentication and a verification code to email.
- Carefully record and save recovery codes for two-factor authentication.
- Do not use easy simple passwords like 567N765n
- Do not keep a Seed-phrase all in one place, split it into 2 or more parts and keep it in different places. (Seed-phrase is a set of random 12,18, 24 english words, it is used for crypto-wallet recovery).
- Before you start using a crypto wallet, you should try to delete it and restore it via Seed-phrase.
- Prescribe trusted ip-addresses.
- Closely monitor the updates of the wallet, in case the update turns out to be fraudulent, you can be left without funds instantly.
- Always check cryptocurrency investment statements, if a party personally contacts you to invest in cryptocurrency, it should make you suspicious.
- Do not disclose your cryptocurrency private key or cryptocurrency seed-phrase to anyone , keep this information offline in a cold wallet.
- Check the URLs of websites several times and make sure that the digital currency project is trustworthy.
- Do not make any prepayments, regardless of the amounts.
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