Cryptocurrency is a relatively new form of currency that has gained significant popularity in the past few years. Recently, the value of bitcoin and other cryptocurrencies has risen dramatically. While this is excellent news for investors and traders, it also means that hackers are looking at cryptocurrency as an easy target for their next attack. Making BTC bankable for institutional investors as more retail traders decide to invest their money in the Bitcoin cryptocurrency. Here we’ll look at some of the worst cryptocurrency hacking incidents in history so you can see just how vulnerable this new digital asset is:
Worst Cryptocurrency Hacking Incidents In History
Cryptocurrency is not immune to hacking. Before you get into the cryptocurrency hacks, it’s important to note cryptocurrency itself is not immune to hacking. Some of the most famous cryptocurrency hacks have occurred in recent years and have resulted in hundreds of millions of dollars being stolen. Here are some major hacking incidents that have occurred since 2017:
- Coinrail – $40 Million
- Coincheck – $534 Million (the largest hack ever)
- Mt Gox – $460 Million (the second-largest hack ever)
- Bitfinex – $72 million
Coinrail, $40 Million
Coinrail is a South Korean cryptocurrency exchange. In June 2018, Coinrail was hacked by a group of hackers who were able to get into the exchange’s hot wallet. The hackers stole around $40 million worth of tokens, including NPXS, ATX, DENT, and Tron.
Coinrail is one of the minor exchanges in South Korea, with only about 50 coins listed on its website. Nevertheless, this incident serves as an important reminder for all investors, no matter how small an exchange may seem and how secure it appears. There always remains some risk when trading cryptocurrencies on exchanges you do not own or control yourself directly.
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Coincheck, $534 Million
This incident was the largest cryptocurrency hacking event in history, with hackers stealing $534 million worth of XEM. The perpetrators could access the NEM protocol through a vulnerability in its network and subsequently withdraw $534 million worth of XEM from Coincheck’s hot wallet. The hackers could then launder their funds by depositing them into other exchanges and selling off some of them on an OTC market.
Mt.Gox, $460 Million
Mt.Gox was a cryptocurrency exchange based in Tokyo, Japan. Launched in July 2010, by 2013 and 2014, it was handling over 70% of all bitcoin transactions worldwide as the largest bitcoin intermediary and the world’s leading bitcoin exchange. On February 7th, 2014, Mt.Gox suspended trading, closed its website and exchange service, and filed for bankruptcy protection from creditors.
The company claimed it had lost nearly $473 million worth of bitcoins, likely due to theft. In April 2014, the company began liquidation proceedings. Formerly one of the largest cryptocurrency exchanges measured by trading volume, Mt Gox went bankrupt in February 2014 after losing about 850 thousand bitcoins belonging to its clients. It was valued at more than $450 million then.
Bitfinex, $72 million
Bitfinex was the victim of one of the biggest hacks in cryptocurrency history. The incident occurred on August 2nd, 2016, resulting in a whopping $72 million worth of bitcoin being stolen from Bitfinex’s hot wallet. According to a report published by BFXCares (Bitfinex’s customer support service), hackers used a vulnerability in the BitGo multisig wallet to steal 119,756 BTC valued at $72 million today’s prices.
Bitstamp also suffered a hack in 2015 when they lost 18,866 BTC or around $5 million at current rates. However, unlike Bitfinex, which returned all funds to customers after recovering them from cold storage wallets. Bitstamp only paid back its customers according to their initial investment amount and interest earned over time using an accelerated repayment plan called “BFX tokens,” with an average price for one token equivalent to about 20% value of what was stolen; by hackers.
Conclusion
Cryptocurrencies are a hot topic in finance, with everyone from investors to governments trying to figure out how best to deal with them. Unfortunately, cryptocurrency is not immune to hacking, as we have seen in some of the worst cryptocurrency hacking incidents in history. If you want to do safe bitcoin trading, then use bitcoin trading software. It’s important for everyone who uses cryptocurrencies or even thinks about using them to understand why this happens so they can protect themselves against it.
