Biggest Hacks and Scams of Cryptos
The loosely regulated and anonymous nature of cryptocurrencies make them a honeypot for hackers. Hackers and scammers are always on the lookout for loopholes and bugs in crypto wallets and exchanges that they can exploit. Unfortunately, whenever one is found and exploited, it almost always means enormous loss of cryptocurrencies. Let’s look at some of the biggest crypto hacks in the history of cryptos.
Mt. Gox Hack
The hack of Mt. Gox remains one of the most infamous hacking heists in the history of cryptocurrencies; its effect is still being felt in the crypto space. During the incident, more than 740,000 Bitcoins were stolen (are you trying to do the math in your head; 740,000 * 7000, right?)
Launched in 2010 by developer Jed McCaleb, he sold the exchange to Mark Karpeles in 2011. Five months after the purchase, the exchange was hit, and 2,609 Bitcoins were stolen. Hackers were able to compromise a computer belonging to an employee of Mt. Gox.
The price of bitcoin was still low then, and the exchange overcame the 2011 hack with ease. However, hackers dealt the final blow to the exchange in 2014. Just to give you a perspective of how large Mt. Gox was, the company was handling around 70% of all Bitcoin transactions in the world. When their security systems were breached, about 850,000 bitcoins were stolen (valued at $450 million at that time). The company managed to recover 200,000 bitcoins, but I am not sure they have compensated any of the victims.
Bitstamp was founded in 2011 and is amongst one of the oldest exchanges still operational today. But like most major crypto platforms, they have had their fair share of hacking incidents. In mid-2015, hackers targeted Bitstamp employees via phishing email and Skype, sending them malicious documents.
Sadly, one of the employees downloaded this malware and compromised the exchange’s hot wallets. The result was that almost 19,000 bitcoins were lost in December 2014 (valued at $5 million at that time).
There’s arguably any crypto trader that is not familiar with Bitfinex. Currently ranked as the 5th largest crypto exchange, based on daily trading volumes, they were hacked in August 2016. More than 120,000 bitcoins valued at $66 million was stolen, and this heist actually affected the price of Bitcoin. The price of Bitcoin moved from $600 down to $540.
I had no choice but to include Coincheck’s hack because it is arguably the most recent and biggest hack in the cryptocurrency space. In January 2018 hackers succeeded in stealing $532 million worth of cryptocurrency from the exchange.
Unlike most hack cases were Bitcoin or Ethereum gets stolen, this time hackers targeted NEM coins. The NEM CEO announced that NEM was going to work with the exchange to recover lost funds. However, I doubt this is ever going to happen, considering how loosely regulated the market is.
As I earlier stated, hackers are constantly on the lookout to exploit loopholes in crypto systems. Other worthy mentions on the list of past hacks include Gatecoin, BitHumb, and Cryptsy Exchange, amongst many others. Even popular exchanges like Binance and Coinbase have come under fire recently.
The sad thing in most of these cases is that victims hardly ever recover their digital assets, or get compensated. It is therefore necessary that you take some extra steps to secure your crypto assets by storing them in offline wallet when possible.