5 Biggest Thefts of Cryptocurrencies
One of the main causes of cryptocurrency instability is frequent hacker thefts, which are estimated at hundreds of millions of dollars. Here are some of the most spectacular.
With the growth of Bitcoin and other cryptocurrencies, hacker intrusions into online exchange offices have become more frequent. No wonder since the cluster directory shows there are wallets worth hundreds of millions.
As the value of mining has skyrocketed, these incursions have become serious business for criminals(and North Korea, if you believe the accusations of individual countries). After the latest theft, which is the largest in history, a serious question arises as to how secure cryptocurrencies are online.
Tether hack in 2017
Stolen amount: $31 million
Tether is a cryptocurrency that combines the possibilities of classic money(dollar, euro and yen) and blockchain technology. In November last year, hackers managed to break into and steal Tether tokens(which are used for transactions) worth almost 31 million dollars.
In response to these problems, Tether introduced measures that made it impossible for attackers to change stolen tokens into classic currencies or Bitcoin. The result was a general panic in the market, which caused the value of Bitcoin to fall.
The theft was accompanied by accusations that Bitfinex, one of the largest exchange offices, used Tether to commit fraud by presenting that Tether tokens were pegged to the dollar in a 1: 1 ratio, providing very little evidence to support it.
The story related to Tether and Bitfinex is not over, as the US government is very interested in this case, which may further affect the stability of cryptocurrencies. Many experts believe that the value of cryptocurrencies largely depends on the fate of Tether, who is presented as an example of a stable cryptocurrency because of its attachment to the dollar.
Ethereum also got hacked in 2017
Stolen amount: $31 million
No currency is safe from hackers. If Bitcoin as the most popular currency is under constant attack, Ethereum as the second most valued currency cannot be immune. A major theft of this currency occurred last July when an unknown hacker robbed three large wallets.
Ethereum worth $31 million was then stolen as thief managed to change the ownership of the wallets using the security flaws of the system.
The owner of one wallet – Swarm City, contacted the creators of Ethereum who hired computer experts(“good hackers”) to get the money back.
These experts managed to “steal” funds from compromised wallets in order to keep those funds safe. They practically used the same methods as thieves, only this time they stole for the owners.
Part of the funds was saved in this way, but the robbery is still marked as one of the biggest. Interestingly, the attack and counterattack took place in less than 24 hours.
As usual, the main reason for a successful robbery is not the genius of the hacker, but the security flaw that enabled the robbery to be carried out. It’s like if the bank left the door unlocked and then explained that it wasn’t about their stupidity, but about the genius of thieves who just walked in and took the money.
NiceHash hack in 2017
Stolen amount: $78 million
It is not just Asian markets that are being targeted. Slovenians entered this infamous history after the robbery of the company NiceHash, which connects cryptocurrency miners with those who sell computer power for mining. All transactions are conducted in Bitcoins.
Everything on paper looked great, until there was a hacker intrusion on NiceHash servers. First, users reported that they could not access their funds or perform transactions. When trying to log in, a message came out that the server was being maintained.
However, the theft could not be covered up, especially since it was the theft of over 4,700 Bitcoins whose value at the time was 78 million dollars! As is usually the case when a cryptocurrency robbery occurs, the funds have disappeared without a trace and will probably never be found.
Interestingly, NiceHash was able to recover and resume operations despite the loss suffered. The founder and CEO of the company, Marko Kobal, resigned in order to give a chance to the new management. In a very short time, the security structures have been improved while the users are still there, probably with the belief that the lightning will not strike twice in the same place.
It is interesting how every stolen company after the theft comes out with the information that the omissions have been corrected and that now everything is super safe. Until the next failure.
Bitfinex hack in 2016
Stolen amount: $72 million
You’re probably wondering why the Bitfinex robbery comes in second when the value is less than the intrusion into NiceHash. The answer is self-evident when you look that about 120,000 Bitcoins have been stolen!
If we transferred that amount to today’s value of this cryptocurrency, we would get an incredible amount of a billion dollars! As it is a robbery that happened before the cryptocurrency value explosion, the stolen Bitcoins were worth “only” 72 million dollars at that time.
Thieves stole users’ wallets despite multiple protections. Some experts have accused blockchain company BitGo, which was part of the security procedure, of being the culprit for the intrusion, although they have denied it.
Although it turns out that no one is to blame, the thieves managed to execute transactions and steal a huge amount of Bitcoin. Those funds were never found, which makes this robbery even more spectacular when it comes to the value of the loot, which has multiplied.
Bitfinex tried to iron out the incident by offering aggrieved users some coupons that the company would redeem to mitigate the loss. It is interesting that this exchange office continued to work normally, with the promise that something like this would never happen again.
Mt. Gox hack lasted 3 years!(2011-2014)
Stolen amount: ~$450 million
Once the largest exchange office in the world, Mt. Gox is now an example of how not to run a business. This is almost the biggest robbery since it was discovered at the time that over 750,000 Bitcoins were stolen from users and another 100,000 owned by Mt. Gox!
The value of the robbery is estimated at around 470 million dollars! It turned out that most of the theft was committed in 2011. Due to the lack of security measures, hackers have been stealing for years without anyone noticing.
To make things more amazing, Mt. Gox was the first in Bitcoin trading at the time with over 70 percent of transactions in this cryptocurrency. It will later turn out that the figures were false and that the leaders of the company hid the financial situation until everything broke down in February 2014.
It was then discovered that 850,000 Bitcoins were stolen from Mt. Gox and its users and the company has no idea how to return them. Mt. Gox eventually went bankrupt while CEO Mark Karpelés was arrested for embezzlement that, to be more bizarre, had nothing to do with the disappearance of Bitcoin!
Eventually, the authorities tracked down 200,000 Bitcoins that were retained in order to pay off creditors in the bankruptcy process. This is just part of the details of the story of Mt. Gox fiasco. The complete story is so amazing that we are sure that one day a film will be made about a bunch of arrogant programmers who demolished one of the biggest companies to the ground.