Top 5 cryptocurrency hacks & how to protect your funds

When you choose to buy Bitcoin, you should be aware that most platforms are prone to hacking attacks. You might remember that early last year, popular cryptocurrency exchange Binance was highjacked for a total of 7000 Bitcoin. At the time of the hack, the amount was worth nearly $40 million, and the exchange was even considering a blockchain rollback to reclaim the funds. While this was one of the biggest cyber attacks to date, it is not the only one. In fact, cryptocurrency exchanges are rather famous for their security, given all the hacking attempts that occur regularly.

And while their high-tech systems are able to counter nearly every cyberattack, there are a number of sophisticated hacking attempts that manage to go through. And when that happens, large amounts of cryptocurrency are usually stolen. In this article, we will take a look at some of the largest cryptocurrency thefts of history, and give some pointers to help you keep your funds safe. Without further ado, let’s delve in.

Biggest cryptocurrency hacks in history

While not the only ones, the following hacks are known to be some of the most damaging in the history of the crypto industry.

Bithumb Hack

Stolen funds: $30 Million

On June 19th, 2019, Bithumb was hit with a hack that cost the exchange nearly $30 million dollars. Thankfully the exchange took it upon itself to refund each and every customer that was impacted by the attack. However, the refund was not enough to restore the platform’s popularity. Due to the event, the exchange trading volumes experienced a massive drop that has not yet been recovered. The attack stole funds from the platform’s online wallet, which is riskier than its cold wallets (funds stored offline. To this day, no one has been arrested for the hack, and the funds are still in circulation.

Coinrail Hack

Stolen funds: $37.2 Million

Before Bithump’s cyberattack, its South Korean competitor Coinrail was hacked as well. The hackers acquired more than $37.2 million in cryptocurrencies, most of which came from Pundi X and Aston. As a result of the attack, the markets turned bearish and Bitcoin lost over 10% of its value within the day of the attack. Coinrail had to temporarily disable all functionalities of its platform but quickly re-established its presence and continues operating to this date.

Binance Hack

Stolen funds: $40 Million

Binance’s hack was certainly the most popular in this list since the exchange had not been hacked since its creation. The hackers managed to steal more than 7000 Bitcoin which, at the time of this writing is worth nearly $100 million. Due to the size of the attack, the Chinese mining operations came together to discuss the possibility of an intentional 51% to the Bitcoin network in order to get the coins out of circulation. After careful consideration of the pros and cons, it was decided not to proceed with this action and simply see the attack as a lesson to improve upon. Binance used its insurance fund to cover the losses of the attack and further improved its security measures.

BitGrail

Stolen funds: $195 Million

BitGrail’s hack claimed nearly $200 million in stolen cryptocurrency, most of which came from the coin NANO. The cyberattack was rather controversial, and many cryptocurrency-related publications don’t rule out the possible involvement of NANO’s development team as well as the founder of BitGrail, Francesco Firano. The attack had a massive impact on NANO’s price which experienced one of the largest losses since its peak.

Coincheck

Stolen funds: $534 Million

This is probably the most popular and expensive hack of all time. Back in January 2018, in the early days of the latest Bitcoin bear market, Japanese exchange Coincheck was hacked for more than half a billion in NEM coins. Once again, the thieves targetted the exchange’s hot wallet, calling for an increase in security measures to avoid such issues occurring in the future. Despite the massive hack, Coincheck is still a popular platform and was recently acquired by Monex Group.

How to protect your funds

  • Whenever possible, try to keep your funds in cold storage, meaning in offline private wallets that only you control. In most cases, this means avoiding mobile and online wallets completely and opting for hardware or desktop wallets instead. Do not store funds on an exchange platform unless they are meant for trading.
  • Add as many protection layers to your wallet as you can. This includes email verification, SMS verification, as well as two-factor authentication (2FA). Doing so will ensure that no one can access the funds in your wallet.
  • Conduct in-depth research before choosing to commit to a particular exchange platform. By this, we don’t mean that you should try to find a platform that hasn’t been hacked before, but a platform that refunded all its users after an attack was made. This type of commitment is a good sign of a platform’s future growth potential.
  • Do not reveal your password to anyone, even if the request is seemingly made by a cryptocurrency exchange. The same is true for private keys. We have often seen that this can result in hacking attempts that can claim all the funds in your wallet.

Wrapping up

After reading through this post, you should understand that nearly no exchange platform is immune to hacking attempts. While most emphasize high security and invest accordingly, there will always be loopholes that can be taken advantage of. This is also why you will hear experienced investors preach that you should “never store your funds in an exchange wallet”.

The best thing you can do is download a non-custodial wallet or purchase a hardware wallet to store your funds in. By doing so, you remain in full control of your coins and have the possibility to store them offline, away from prying eyes.

We recommend you research the topic further as you move on from this post and try to create a list of safe practices that you can follow regularly, in order to keep your funds safe at all times.

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