As soon as cryptocurrency became a valuable thing, it was bound to become a target for schemers, frauds and thieves. With the rapid pace that cryptocurrency has gained globally, the attention towards this has also gained substantially. Wherever there is money involved, there is always someone waiting to snatch it illegally or rob it. Same is the case with cryptocurrency.
Let’s look at the 6 biggest heists that cryptocurrencies have seen in their history.
#6 – Tether – R367 million ($30.9 million)
In November of 2017, Tether was the target of a $30.9 million heist. Tether is a platform that combines the fiat currency and blockchain technology. You can use Tether to convert a real currency like the US dollar into a cryptocurrency like Bitcoin, Ethereum and Litecoin. When you deposit $1 into your Tether account, you get 1 USD Token. This can be used to purchase Bitcoins and other cryptocurrencies.
Since Bitcoin is untraceable, someone used a Bitcoin login address to access Tether and made the transaction. Already being under fire for its partnerships with some particular cryptocurrency platforms, Tether came under huge criticism and security alert when an amount this big went missing.
#5 – Ethereum – R370 million ($31 million)
Ethereum is the world’s second largest cryptocurrency. In July of 2017, a hacker gained access to three huge Ethereum wallets and stole a reported $31 million in only a few minutes. The amount equal to about 153,037 ETH. These wallets belonged to Swarm City Aeternity and Edgeless Casino.
The hacker or hackers managed to steal these coins by changing the ownership of the wallets, by taking advantage of a system weakness. As soon as developers took notice of their money going missing, they informed Ethereum. A widespread call to white-hat hackers was given to recover the money.
#4 – NiceHash – R927 million ($78 million)
On December 6, the Slovenian company became the target of a huge cyber attack. Users reported on Reddit that they were unable to access their accounts and every time they tried, it showed that the site was under maintenance.
Before long, it was realised that NiceHash was under a huge attack, with someone hacking and trying to access a huge number of accounts. Eventually, a wallet that had over 4700 BTC was hacked, and stolen.
#3 – Bitfinex – R856 million ($72 million)
Bitfinex used to be the world’s largest Bitcoin Exchange. In August 2016, hackers accessed Bitfinex’s accounts and managed to run away with 119,756 BTC to be exact. Despite Bitfinex implementing multiple layers of security and verification checks, the hack was successful.
Bitfinex tried to be as clear about their further investigations as possible and even promised their customers on a compensation. Bitfinex socialized the losses and every user lost 36% of their Bitcoin balance and was given a token which was repaid and converted into Bitcoin over time.
#2 – Mt. Gox – R4,1 billion ($350 million)
The second most expensive heist in the history of the Japanese Bitcoin exchange, Mt. Gox, which was the biggest Bitcoin exchange at the time, the hack was worth 744,408 BTC. What happened is still uncertain although official statements have been made, deeper investigations are still underway. Allegedly someone managed to access the computer belonging to one of the auditors and took advantage of a bug to access Mt. Gox servers.
By changing the value of the Bitcoin to an equivalent of 1 cent, they managed to draw off around 2000 BTC, this hack bankrupted Mt. Gox which brought further issues with the exchange to the fore. The artificially deflated price and the hack were headlined over the news but customers took to buying the “Gox” coins anyway.
#1 – Coincheck -R4,7 billion ($400 million)
On the 26th of January 2018 was the biggest crypto heist in history on yet another Japanese exchange, Coincheck. A record $400 million in NEM ($XEM) tokens were sent directly from the exchange using just one account. Shortly after the announcement of the hack, NEM saw prices fall as much as 10% and other crypto markets followed suit causing instability in the market.
At this time it is still uncertain exactly how the hack was carried out, we do know that the exchange had the bad practice of keeping their cryptocurrency in online “Hot wallets”, the security standard for exchanges is to keep the bulk of their crypto in cold storage. Also, they were not using multi-signature which would have been an additional layer of security which may have prevented such a hack from taking place.
These hacks should be a red alert to the rest of the industry to step up with security measures. With the advent of decentralized exchanges, it begs the question, why do we keep making the same mistakes by using vulnerable centralized services?
Do you think that 2018 will see a major move from centralized exchanges to decentralized alternatives? Let us know in the comments below.