Indeed, cryptocurrency exchanges and custodians are the primary targets of hackers in the crypto industry. The reason for that is simple – exchanges and custodians are like the banks of cryptos. They process large volumes of daily transactions, which makes them a profitable game for hackers.
Data gathered by Industry media, InsideTheBitcoins, revealed that the crypto space lost more than $11 billion in cryptocurrencies (figure based on the currency crypto market rate) to exchange hacks from 2011 to 2019.
Here’s a highlight of the most notable crypto exchange hacks in the last eight years.
Bitcoinica and Bitfloor (2012)
Bitcoinica is an early Bitcoin exchange platform established in 2012. The platform suffered three different hacks in one year, amounting to an estimated loss of $1.05 billion worth of cryptocurrencies.
One of the attacks involved the decryption of Bitcoinica’s hot wallet, which led to the loss of 43,554 BTC. Another attack was through illegal access into the Bitcoinica database, and the hackers made away with 38,000 BTC. The exchange lost another 40,000 BTC to hackers, but the funds were reportedly later recovered.
Another major attack in 2012 was executed on Bitfloor. The exchange lost about $208 million worth of cryptocurrency (24,000 BTC).
PicoStocks and Vicurex (2013)
2013 wasn’t a vacation for cryptocurrency hackers as they launched their attacks on exchanges, which led to the loss of at least $109.6 million. PicoStocks exchange alone lost about $62 million (7,196BTC) from both its hot and cold wallets. Another victim of 2013 crypto hack was Vicurex, with $12.6 million lost in 3 different cryptocurrencies (1,454 BTC; 225,263 TRC; 23,400 LTC).
The greatest crypto hack of all time
The biggest crypto hack in the history of Bitcoin happened in 2014, with Tokyo-based Mt. Gox, the largest bitcoin exchange at that time, being the unlucky victim. Mt. Gox allegedly lost about 850,000 BTC, which was valued at $6.5 billion at the time of writing. The exchange was forced shut.
Fast forward to 2016, the attack on DAO – a decentralized autonomous organization became the talk of the town. DAO lost $601 million (3.6 million ETH) to unknown hackers. In the same year, Bitfinex lost about 120,000 BTC ($1 billion). Sources say the attack was through by just two hackers.
Increased Crypto Hacks in 2019
According to sources, eight different attacks occurred in 2019, recording the highest number of attacks in the history of cryptocurrencies with the most notable one involving the world’s leading crypto exchange Binance. Reports show that Binance lost 7,000 BTC ($60.5 million) to hackers who exploited the weakness of the platform’s security to obtain a large amount of user data.
Although the blockchain is immutable, hackers have not slowed down in seeking other ways to breach custodian platforms holding cryptocurrencies. As noted by one McAfee executive, “The industry is so new right now, that we don’t even have a platform for finding and reporting vulnerabilities.”
The best advice so far is for cryptocurrency organizations to be security cautious and transparent at all times when dealing with users’ funds. Crypto traders and investors, on the other hand, should not store large amounts of funds on cryptocurrency exchanges.
Image via Shutterstock.