A cryptocurrency hack is a cyberattack in which a hacker gets unauthorized access to a cryptocurrency exchange, wallet, or another digital asset platform intending to steal cryptocurrencies or other digital assets. The crypto hacker may use phishing, malware, social engineering, or attack weaknesses in the platform’s security to get access.
According to statistics, the total amount of bitcoin stolen in 2019 through cyberattacks was about $292.7 million. The reported total amount stolen from crypto attacks in 2020 was roughly $3.0 billion. Several high-profile crypto attacks occurred in 2021, including the $600 million Poly Network hack and the $120 million hack of the DeFi network EasyFi.
According to a quarterly study by blockchain security company CertiK, hackers accessed approximately $320 million via on-chain data consolidation in the first quarter of 2023. The losses, however, were much smaller when compared to the first and fourth quarters of 2022, when hackers stole around $1.3 billion and $950 million, respectively.
90 exit scam instances resulted in over $31 million in losses, while 52 flash loan and oracle manipulation attacks resulted in over $222 million in damages. CertiK said that BNB Chain had the most issues in the quarter, with 139, while Ethereum lost the most money in the first quarter of 2023, with $221 million, despite having fewer accidents.
Several high-profile attacks have occurred in the cryptocurrency business throughout the years, with the reported total amount taken from crypto hacks climbing dramatically in 2020. However, there are indicators that the business is growing safer.
According to a survey by blockchain security company CertiK, hackers got access to approximately $320 million in the first quarter of 2023. While this is still a considerable sum, it is less than the reported stolen in the first and fourth quarters of 2022.
How do organizations prevent crypto hacks?
Cryptocurrencies have grown in prominence as an investment asset class and payment mechanism, but they are also vulnerable to hacks. Enterprises must implement adequate security measures to safeguard their crypto assets from hacker efforts. Organizations may employ various security measures to reduce the danger of crypto breaches, but the issue remains if these precautions are enough.
Using safe wallets to keep crypto assets is one of the most important precautions that businesses can take. Hardware wallets like Trezor and Ledger provide additional protection by storing private keys offline. Even with encrypted wallets, however, there are hazards connected with accessing third-party service providers or exchanges.
Another necessary security precaution that firms must deploy is two-factor authentication (2FA). To access the account, 2FA needs an extra layer of authentication, often a code from a second device. This safeguard may prevent unwanted access to the organization’s cryptocurrency assets, but is not guaranteed against hacking efforts.
Multi-signature wallets may also help to decrease the possibility of illegal access. Multi-signature wallets require many permissions or signatures before a transaction can take place, which aids in the prevention of crypto asset loss or theft. Audits of an organization’s security procedures regularly may help detect weaknesses and verify that all security measures are up-to-date.
Employee education is also essential in avoiding crypto attacks. Employees should be educated on the best methods to secure their crypto assets, like avoiding fraudulent emails, having difficult passwords, and guarding their private details. However, human error is still possible, and there is always the possibility that an employee would mistakenly expose personal information or become a victim of a cyberattack.
Finally, cyber insurance coverage may cover damages incurred because of theft, fraud, or other cyber events. However, ensuring that the insurance offers enough coverage is critical, and it is not a replacement for establishing strong security measures.
Finally, although the security precautions outlined above are critical in preventing crypto attacks, they may not be adequate. Organizations must have a complete security program covering all potential threats. To keep up with cyber threats’ shifting nature, they must constantly analyze and improve their security procedures. While there is no assurance against hacking efforts, implementing robust security measures may help reduce the risk of financial losses because of cyber disasters.
Enterprises should use two-factor authentication (2FA) to offer an additional layer of protection to their accounts. 2FA causes a code from an original device and a login and password. This aids in preventing unlawful access to the organization’s cryptocurrency assets.
Multi-signature wallets are another security precaution that enterprises may use. Before a transaction may take place, multi-signature wallets need several signatures or permissions. This decreases the danger of illegal access and may aid in preventing crypto asset theft or loss.
Audits of an organization’s crypto holdings and security procedures regularly may help detect weaknesses and verify that all security measures are up-to-date. This is especially significant considering the Bitcoin landscape’s fast evolution.
Employee education is also essential in avoiding crypto attacks. Employees should be informed on crypto asset security best practices, such as avoiding phishing schemes, using strong passwords, and safeguarding private keys.
Finally, corporations may consider getting cyber insurance to protect themselves against financial damages caused by a crypto breach. Cyber insurance plans may cover losses caused by theft, fraud, or other cyber events.
How crypto wallets get hacked
Crypto hackers use various techniques to hack crypto wallets, including:
Phishing Attacks
Phishing attacks are a standard method hackers use to acquire information from unsuspecting targets. These attackers often develop cloned websites that seem incredibly similar to reputable Bitcoin services to confuse their targets.
To make things worse, they chose deceptive domain names for these scams. Because cloned websites are sometimes indistinguishable from actual ones, targets are easily duped into going onto the bogus sites and inputting their crypto account information.
The data is immediately delivered to the hackers when they enter their details. With this information, they may access the victim’s account on a reputable cryptocurrency website. These assaults may cause the theft of Bitcoin holdings and losing sensitive personal and financial data.
Organizations must proactively safeguard themselves and their workers against phishing assaults. Employee education on recognizing and avoiding phishing scams is critical in averting these assaults.
Businesses may also use technological solutions such as firewalls, spam filters, and antivirus software to identify and stop phishing emails and cloned websites. Security audits and upgrades should be performed regularly to ensure that security policies remain current and effective in the face of emerging cyber threats.
Fake hardware wallets
Fake hardware wallets are an increasingly popular kind of hacking that people should know when securing their Bitcoin assets. Hackers often target those who already possess a hardware wallet, since they know these people are serious about protecting their digital assets. The goal is to dupe them into stealing their crypto keys via a customized replacement device.
The victim will usually get a package containing the forged hardware wallet. Typically, the package will contain a letter informing the target that their existing device is insecure and must be replaced with the provided wallet. Users will be instructed to connect the new gadget to a computer and input their crypto wallet recovery key.
The keys are captured and communicated to the hackers, who may then open the wallet on the blockchain. They may quickly siphon off the cash once they can access the wallet. The victim cannot access or retrieve their Bitcoin assets.
To prevent being a victim of this assault, people should be cautious when receiving unexpected goods or replacement hardware wallets. They should always check the package or device’s validity before utilizing it. It is also critical to buy hardware wallets from reliable vendors and consult the manufacturer’s website for information on identifying counterfeit devices.
Malware
Hackers use different malware strains to attack commonly used operating systems such as Windows and macOS to steal Bitcoin. Some viruses identify copied Bitcoin addresses and swap them with the hackers’ wallet addresses. If these exchanges are successful, bitcoins are often delivered to unanticipated addresses controlled by the attackers.
Malware is used to infiltrate computers by luring users into installing harmful software. However, in recent years, hackers have resorted to diverting targets to malicious websites. When the user visits the page, the virus looks for device vulnerabilities and infects crucial clipboard modules.
This virus poses a serious risk to cryptocurrency owners and investors since it might cause them to lose their digital assets without awareness. The virus can intercept and replace cryptocurrency wallet addresses in the clipboard, making it impossible for victims to identify the change before transferring payments.
Individuals must be vigilant while accessing unfamiliar websites, installing software from unknown sources, and validating the legitimacy of Bitcoin wallet addresses before transferring money to avoid these assaults. It is also suggested that operating systems and antivirus software be updated to prevent and identify any malware attacks.
Exploitation and countermeasures for cryptographic attacks
Crypto hacks can devastate individuals, businesses, and even entire industries. Undermining and recovering from crypto hacks can be a complex process that involves several steps. Here are some ways to undermine and recover from crypto hacks:
- Prevention: Prevention is the best way to undermine crypto hacks. Ensure that you have robust security measures in place to protect your cryptocurrency. This includes using strong passwords, enabling two-factor authentication, securing your private keys, and using reputable cryptocurrency wallets and exchanges.
- Early detection: Early detection of a hack can help minimize its impact. Look at your cryptocurrency accounts and look for any unusual transactions or activities. If you suspect your account has been hacked, immediately report it to your cryptocurrency provider.
- Response plan: Have a response plan to help recover from a hack. This should include notifying law enforcement, freezing your accounts, and changing passwords.
- Blockchain analysis: Blockchain analysis can help trace the movements of stolen cryptocurrency. It can help identify the wallets and exchanges where the stolen cryptocurrency was transferred, making it easier to recover the stolen funds.
- Collaboration: Collaboration with other affected parties, such as exchanges, can help recover stolen cryptocurrency. Exchanges can freeze accounts that have received stolen funds, preventing the hackers from withdrawing the funds.
- Legal action: Legal action can be taken against hackers to recover stolen cryptocurrency. This can involve filing criminal charges, civil lawsuits, and working with law enforcement agencies to track down the hackers.
- Education: Education is essential in undermining crypto hacks. Educate yourself on the latest security measures and stay up-to-date on the latest hacking techniques. This can help you identify and prevent future attacks.
Notable crypto hacks of all time
There have been three big cryptocurrency hacks since the inception of the market that investors and traders should be aware of. These hacks entailed the theft of large sums of money, with the culprits walking away with the money. They resulted in severe losses for investors and perhaps the demise of big firms in the cryptocurrency market. These hacks have become the most spectacular and notorious crypto heists in history. Here is a list of notable crypto hacks:
Mt. Gox, $460M
Mt. Gox, a Tokyo-based cryptocurrency exchange, lost $460 million in a 2014 breach owing to inadequate security software and poor management. Over many years, hackers stole private keys. Mt. Gox ceased all withdrawals and went offline a few weeks later, with all messages deleted from its Twitter account.
The firm declared bankruptcy, and some consumers have yet to get compensation, though they are anticipated to do so this year. CEO Mark Karpelès was arrested in 2015 for fraud and embezzlement. Mt. Gox has a history of problems, including a 2011 breach that cost the company $8.75 million and a $75 million lawsuit from a former business partner. In 2013, federal investigators in the United States confiscated $5 million from Mt. Gox for failing to register as a money transmitter.
Linode
Hackers attacked virtual services Bitcoin exchanges and whales used to keep their hot wallets hosted by web hosting company Linode in June 2011. At least 46k BTC were taken, although the precise amount is unclear. Bitcoin, which lost over 43k BTC, Bitcoin. cx, which lost 3k BTC, and Bitcoin creator Gavin Andersen, who lost 5k BTC, were all notable theft victims. The attack jeopardized the security of Linode’s services, which were used by the Bitcoin community to store digital assets.
Coincheck, $532M
In 2018, Coincheck, a Japanese Bitcoin wallet and cryptocurrency exchange platform, set the world record for the most significant crypto hack in history. The company reported that the cyber thieves had stolen around $530 million of NEM cryptocurrency from their digital wallet.
After the incident, Coincheck refunded customers who had lost money and the platform was taken over by a Japanese firm for an undisclosed amount.
Conclusion
Cryptocurrencies have grown in popularity as an investment asset class and a means of payment, but they are also subject to hacks. As a result, enterprises must implement proper security measures to protect their crypto assets from hacker efforts.
Using safe wallets, like hardware wallets, to hold crypto assets is one of the most important precautions. Two-factor authentication (2FA) protects the organization’s cryptocurrency assets against unwanted access. Multi-signature wallets may also help to decrease the possibility of illegal access.
Audits of an organization’s security procedures regularly may help detect weaknesses and verify that all security measures are current. Employee training is also vital in avoiding crypto attacks.
Finally, cyber insurance coverage may cover damages incurred because of theft, fraud, or other cyber events. However, ensuring that the insurance offers enough coverage is critical, and it is not a replacement for establishing strong security measures. Although these security measures are critical, they may not be enough, and companies must stay on top of emerging threats and change their security processes appropriately.
