CRYPTOCURRENCY HEIST, IS IT REAL?
Enthusiasts will tell you how safe and guarded blockchain and cryptocurrency are, but no matter how safe a technology or product is, you should always pay attention to its vulnerabilities, this way, you can always take the necessary precautions and expect the unexpected.
In this article, we want you to read through several incidents where a cryptocurrency heist happened and why it happened. Brace yourself as the value of the incidents will make you gasp in disbelief!
Did you know that just last August, hackers stole approximately $600 million from Blockchain site Poly Network, yes, you read that right, $600 MILLION! This was one of the biggest heists in decentralized finance history. This heist was caused when a hacker exploited a “vulnerability between contract calls”, making Poly Network call on various exchanges to block deposits of the coins after millions of dollars in tokens were transferred to separate cryptocurrency wallets. In the incident, about $267 million of Ether, $252 million of Binance coins, and roughly $85 million in USDC tokens were taken.
In 2019, hackers steal $41 million of Bitcoins from Binance Exchange in just ONE transaction. Binance admitted the incident with a security breach update which stated that hackers were able to obtain a large number of user API keys, 2FA codes, and other info and that the hackers had used a variety of techniques to carry out the heist, including phishing, viruses and other attacks. Binance then confirmed that they use its secure asset fund to cover the losses and that no user funds would be affected.
You might think that cryptocurrency heist is a current issue. But believe it or not, one of the major incidents that shocked the decentralized finance market scene happened in 2014 when Mt Gox, a Tokyo-based cryptocurrency exchange lost 500 MILLION in Bitcoin. Mt Gox suffered a fatal blow in early 2014 when it suspended withdrawals after claiming to have found suspicious activity in its digital wallets. The news of the suspension resulted in the price of bitcoin plunging by 20%. The company discovered that more than 850,000 bitcoins were lost, which represented over 6% of bitcoins in circulation at the time. While it was later able to locate 200,000 bitcoins, the missing 650,000 bitcoins had an intensely threatening effect on the market, due to this loss Mt Gox was pushed into insolvency. It filed for bankruptcy in the Tokyo District Court and was ordered to liquidate in April 2014, but it continued to be the subject of lawsuits.
It was believed that the Mt Gox incident happened due to technical bugs (yes, you read that right, BUGS …) that prevented the company from having a firm grasp on transaction details, including uncertainty relating to whether bitcoins had been transferred to customers’ digital wallets. This issue was the result of a bug in the bitcoin software that allowed users to alter transaction IDs, sometimes referred to as “transaction malleability.”
Through these incidents, we can see that cryptocurrency hacks attract huge amounts of attention often due to the huge sums of money associated with them but there is also an element of fear that is naturally linked to these attacks.
The issue with cryptocurrencies is that they are largely unprotected and therefore, as it usually involves transactions performed by an individual, one must have the needed knowledge of not only its advantages but more importantly its vulnerabilities. Understanding how cryptocurrencies and the technology behind them works is crucial to avoid major financial losses. Always protect your confidential information and keys and make sure that you understand the importance of understanding and how to securely manage your digital assets.
Until then, keep yourself safe and we’ll see you in the next article. Do you have any topics that you would like us to touch on? Leave your comments below!
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References:
1. https://www.bbc.com/news/business-58163917
2. https://www.silicon.co.uk/e-enterprise/financial-market/hackers-steal-41m-bitcoin-246413
