The risk of hacking has been cited as a reason why digital currency hasn’t yet achieved widespread use. While cryptocurrency has a reputation for being transparent, cybercriminals often target platforms and exchanges in an effort to steal from them. According to an analysis of aggregate data by Chainalysis, 35% of all cryptocurrency value was lost due to a security breach between 2020 and Q1 2022. Since their introduction to the market, numerous cryptocurrency platforms have fallen victim to cybersecurity hacks that have led to the loss of customer assets or a breach of data privacy. Even though exchanges do their best to safeguard customer funds, refined hackers can still find ways to steal money. In light of recent high-profile thefts from cryptocurrency exchanges and platforms, many potential investors have been put off from making any substantial investments in this space. Below are some examples of hacks that have occurred over the years.
Cyberattacks On Crypto Platforms
A hacker made off with $625 million worth of user funds from the Ronin Network in March. The blockchain video game Axie Infinity relies on the Ronin Network, which is a side chain (a subset of a larger blockchain). After stealing private keys, the hacker made hundreds of millions in fraudulent withdrawals.
Founded in 2010, Mt. Gox was a cryptocurrency exchange based in Tokyo, Japan. At one point in time, it processed more than 70% of all Bitcoin transactions worldwide, making it the largest cryptocurrency exchange in the world. In 2011, hackers were able to hack into the exchange and made off with Bitcoins worth $8.75 million. Another cyberattack occurred in 2014. It was on a much grander scale this time around. The theft totaled nearly 850,000 bitcoins or $615 million at today’s exchange rate.
In August, another cross-chain bridge cyberattack took place. Approximately $190 million in Bitcoin was stolen after the Nomad bridge was attacked. A flaw in the protocol was used by hackers to steal more money than they had initially deposited. Shortly after the news of the hack spread, hundreds of people flocked to take advantage of it on their own initiative.
KuCoin operates as a cryptocurrency exchange that is headquartered in Singapore. Over $281 million worth of coins and tokens were stolen in a hack that occurred in September 2020. Not only that, but the hackers stole the private keys to some of the most popular wallets on the trading platform. KuCoin’s management immediately launched an in-depth probe into the situation, and they were able to recover $204 million in a matter of weeks.
The cryptocurrency exchange FTX, which is currently going through a bankruptcy process, was hacked on November 12, 2022, making it the most recent exchange to shut down. Reports and the company’s official Twitter account both quote Ryne Miller, who works for FTX, as saying that the company made some unauthorized transactions after it filed for Chapter 11 bankruptcy. Reports indicate that the FTX hack resulted in a loss of around USD 60 million.
Exchanges for virtual currencies are often the prime targets for hackers right now because even a seemingly successful hack could net them billions of dollars in assets. Cryptocurrency is still on the cusp of mainstream acceptance and is largely unregulated. There aren’t many safety nets in place in case of a hack, so victims often have to rely on crypto platforms that they dealt with for compensation. It is essential to take precautions against the potential dangers of cryptocurrency use if you intend to continue using it yourself.