Why Do Crypto Companies Keep Getting Hacked?

When you read the headlines often, you would think that every month brings news of a new hack at a bitcoin company. Let us just begin by looking back at a few of the most significant bitcoin breaches of the last decade. As reported by Investopedia, the first ever major assault using Cryptocurrency occurred in 2011 when a malicious character stole 25,000 Bitcoins from the collapsed marketplace, Mt. Gox. Exactly three years later, the same firm suffered another assault, this time losing another 750,000 Bitcoins. In 2018, 523 million NEM or even XEM coins were stolen from the Coincheck exchange. Coincheck managed to avoid being compromised during this assault, and was eventually bought by the Monex company of Japan.

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Cryptocurrency profits aren’t limited to a few fortunate shareholders. In the last year, hackers have stolen virtual assets worth billions of dollars by breaching Cryptocurrency exchanges that have sprung up in response to the Bitcoin explosion. Over twenty Cryptocurrency exchanges or projects had at least $10 million stolen in digital currency in attacks last year. As per information obtained by NBC News, hackers have stolen over $100 million in at least six separate incidents. As a perspective, in 2020, bank robberies brought in an average of less than $5000 for the criminals involved, according to data compiled by the Federal Bureau of Investigation.

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In 2021, a malicious attacker stole over $600 million worth of Cryptocurrency in a bizarre hack on the decentralized Poly Network. The malicious attacker eventually gave back the majority of the stolen goods and said they had carried out the enormous theft for laughs. Bitmart had roughly $200 million worth of Cryptocurrency stolen from it the same year. Hackers who preyed on Cryptocurrency firms made a fortune in 2022. Wormhole had a $325 million breach in February. The Ronin Network suffered a loss of almost $625 million in digital assets in an assault in March, which was purportedly carried out by the Lazarus Group with support from the North Korean government. Additionally, in September, almost $160 million worth of Cryptocurrency was stolen by market maker Wintermute. Five hundred and seventy million dollars were stolen from Binance in an assault that occurred in October. However, a month later, FTX suffered a $600 million hack.

Such crimes may involve substantial sums of money, but they seldom get the same media attention as armed burglaries. However, bitcoin specialists advise against getting in too deep: Criminals see markets as very profitable new targets. It’s possible to get login credentials by breaking into a Fortune 500 business nowadays. Millions of dollars’ worth of Cryptocurrencies might be stolen from a Cryptocurrency exchange.

Most of these attacks happened between 2011 and 2022, yet they are still among the most well-known in the history of Cryptocurrency theft. The entire worth of the stolen Cryptocurrency during this time period is estimated to be many billion dollars.

Modern Bank Robbers

Over 300 organizations have launched in the last few years to provide users with a simple method to buy and trade anything from bitcoin to more fringe “altcoins” like the dog-inspired dogecoin, which was formerly an online oddity that needed a certain amount of technical understanding exactly to purchase.

Reasons Cybercriminals Target Crypto Companies

Cybercriminals target Cryptocurrency companies for the following 5 reasons:

1. Crypto Technology Remains Infant

Only in 2009 did Bitcoin, the oldest Cryptocurrency in existence, enter the market. Even if millions of other Cryptos have emerged since that day, the market remains in its development. Fraudsters as well as other cybercriminals flourish in this marketplace because it is uncontrolled, full of deceit, as well as prone to wild swings in price.

2. Cryptocurrency is Pseudo-Anonymous

The Cryptocurrency community is aware that most Cryptocurrencies are not really anonymous, but Crypto remains harder to track than fiat currency, making it more appealing to hackers. Furthermore, Cryptocurrency operations may be made anonymous in a number of ways. When a burglar snatches bitcoins, for instance, he or she would probably attempt to hide their traces by utilizing a bitcoin processor, a firm which obfuscates operations for a charge.

3. Crypto Firms Handle Valuable Assets

Malicious hackers target businesses with a concentration on Cryptocurrencies since, by definition, they deal with commodities of extraordinary value. Consider the most well-known Cryptocurrency exchanges. Binance, a digital asset marketplace, processes billions of dollars’ worth of trades every day. A malicious attacker might potentially steal millions if they discovered a security hole in a bridge the platform relied on.

4. Hot Wallets are not Safe

Organizations in the Cryptocurrency space utilize two types of wallets — hot wallets and cold wallets, to keep their clients’ funds secure. Cold wallets are offline hardware storage devices, whereas hot wallets are virtual online vaults. The latter are naturally more susceptible to hacking, and therefore no trading platform could safely hold all Cryptocurrency offline.

5. Decentralized Finance is a Simple Target

P2P lending and other forms of commerce made possible by Decentralized Finance (DeFi) protocols have become a soft target for hackers. Since they are built on open-source code, any potential malicious attacker may easily examine them for flaws. Specifically, hackers used DeFi weaknesses to carry out dozens of Crypto attacks.

The Bottomline

Crypto skeptics say the industry is a boom ready to explode, therefore they assume it is all a hoax. However, Cryptocurrency supporters argue that virtual currencies might make banking more accessible to the masses. You should learn about Cryptocurrency-related criminality whether you identify with either of these extremes or fall somewhere in the middle.

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.