Table of Contents:
- 1. The most effective hacks for crypto exchange
- 2. The biggest crypto exchange hack in the world? The “prize” goes to Coincheck
- 3. The biggest amount of Bitcoin stolen? That would be Mt. Gox
- 4. Exit scam or hack – BitGrail and its suspicious activity
- 5. Summary and conclusion – what do we know from these cases?
The most effective hacks for crypto exchange
Cryptocurrency exchanges have always been a great treat for hackers, bots, and unofficial software used for either stealing money or simply messing with the officials. Of course the main reason for crypto exchange hack to appear is to steal money and as you know, there is plenty of money to steal.
There are of course other reasons why a lot of hackers decide to program their applications in a way they can easily crack the securities of crypto exchanges. It is due to the fact that although they need to keep safe all those money, there are cases when safety precautions are not enough.
One of the best examples how horrifying cryptocurrency hacks can really be could be seen throughout 2019, a year which could “boast” with the largest amount of losses on crypto exchange, which were caused mainly by crypto exchange hacks.
The biggest crypto exchange hack in the world? The “prize” goes to Coincheck
Although the described situations did not happen in 2019, it is crucial to note where all of it began. At the beginning of 2018, Coincheck posted a note saying that both deposits and withdrawals from their exchange has been restricted. Initially there were “minor” problems, but as it later turned out, the same post was re-updated for several times. Of course there were more and more problems that, later on forced the leaders of the exchange to suspend all the transactions, including deposits.
At start, there were only rumours that they must have been hacked. Unfortunately, these rumours occurred to be true. The authors responsible for Coincheck held a conference, where they confirmed the use of hack. What is more, they informed how much funds were stolen. The numbers were gigantic, because it concerned 500 million NEM tokens, what was $530M at that time.
People who created NEM tokens said that securities they applied during creating cryptocurrency made it protected and fully secured, and that it was the fault of Coincheck’s leadership who did not apply the latest tech, including Multisig Contract Smart Signing App. What is more, Coincheck confirmed that yet another reason why they were so vulnerable for attack was the fact that they stored all the crypto tokens on one hot wallet. The prizing of NEM went down enormously – at the beginning it dropped 43% of its value. However, now the price is $0.05, whereas before the hack it was $1.02.
The biggest amount of Bitcoin stolen? That would be Mt. Gox
This is the second hack that we decided to put in this list. It is crucial to note that one of the biggest crypto exchange hack situation in the history happened in 2014 and it concerned Mt. Gox. Since this list list contains not only the latest ones, which occurred in 2019, but also a bit earlier that were as big or even bigger as Mt. Gox. It was the largest Bitcoin theft that happened up to this date and it concerned thousands of users.
February 7th 2014 is a potential date of the hack. This was the first time when deposits and withdrawals where halted at Mt. Gox. Although the authors of the exchange claimed it was due to the bug, which had to be fixed, alter on it turned out that it was just the beginning of the problems. Ten days after the reported bug happened, the site was updated with new safety measures. Unfortunately, on February 24, website went offline. Four days later, namely on Fen. 28, the SEO of the company admitted that they had lost approximately 850,000 BTC, out of which 750,000 belonged to the customers.
The consequences were quite enormous and certainly much more considerable than in case of Coincheck’s issues. When it comes to Bitcoin itself, it lost 33% of its value. However, the leaders of Mt. Gox were charged with many different felonies and, because of that, some of them were arrested. One of them was Mark Karpeles, who spent a year in prison. Although courts in Japan and United States ordered Mt. Gox to refund all the missing money, it has been five years and still many people haven’t received what they lost.
Exit scam or hack – BitGrail and its suspicious activity
The next situation that we present in this list concerns small currency exchange that, as you can guess, had to declare bankruptcy after the “hack” happened. A lot of people don’t believe it was hack due to suspicious activity of the SEO of BitGrail. However, let’s start from the beginning.
A month before alleged hack happened, BitGrail withheld all the withdrawals and deposits of NANO, a cryptocurrency which was back then known as XRB. The founder of BitGrail, namely Francesco Firano said that this situation is temporary and it will be possible to make withdrawals very soon. As we know, it never happened. This was just a beginning of issues. Later on BitGrail introduced identity verification that all users had to complete.
Noteworthy is the fact that even before the official note about hack was released, the price of XRB started to drastically drop. It lost 67% of its value because people knew that something shady is going on. Now, at this moment, the value of this cryptocurrency is $1.5. BitGrail declared bankrupt at the beginning of 2019 and it is said that the total value of stolen funds was $187M.
Summary and conclusion – what do we know from these cases?
Although cryptocurrency market is a very complex and safe machinery that cannot be hacked so easily, the situation of cryptocurrency exchange is different. Because of that, hackers always find a way to steal funds from exchanges. The sad fact is that although the producers implement newer and newer safety precautions, the hackers still managed to steal more than $1.4 billion in total. It only shows that if cryptocurrency exchange applies poorly secured solutions of storing cryptocurrency, it is vulnerable to attacks.