The biggest cryptocurrency hacks of 2018 resulted in hundreds of millions in losses. According to The Wall Street Journal, citing Autonomous Research data, hackers stole $800 million worth of cryptocurrency this year. At the same time, CipherTrace and Carbon Black provided figures of $731 million and $1.1 billion, respectively, for the first six months. It’s worth noting that five hacks among the 11 largest in the last five years took place in the first seven months of 2018, according to Autonomous Research data.
Biggest Cryptocurrency Hacks
The first month of 2018 saw the biggest cryptocurrency hack in history. On January 26, Coincheck, a Japanese cryptocurrency exchange, said that hackers managed to steal $530 million in NEM coins. The theft dethroned the 2014 Mt. Gox hack of $450 million. Coincheck admitted that their own security was at fault. The company kept the coins in a hot wallet, which had Internet access. One solution to recover the funds was for NEM to conduct a hard fork. This would involve splitting the blockchain and roll it back to before the hack took place. However, the NEM Foundation rejected the idea of a hard fork from the start. Instead, they created a tagging system that would identify the stolen coins and prevent hackers from using them.
Less than a month later the cryptocurrency community took another hit. On February 8, it was revealed that $195 million worth of Nano coins was stolen from Italian exchange BitGrail. Some unanswered questions remain regarding the Bitgrail hack. According to Fortune, Bitgrail made some suspicious moves before the theft of Nano coins was revealed and, in a Medium post, The NanoCore Team said that the site’s owner Francesco Firano asked them to modify the ledger with all transactions in order to return the stolen coins, which they refused.
Smaller Hacks – Still Big Money
The other three biggest cryptocurrency hacks of 2018 are relatively small. On June 10, South Korean exchange Coinrail revealed an attack on their platform. Other sources later reported that the theft amounted to $40 million in various coins. In a blog post, Coinrail explained that hackers initially had stolen 30% of their reserves, but they managed to recover two-thirds. On July 15, Coinrail relaunched its platform and offered compensation to the victims.
Another one of the biggest cryptocurrency hacks of 2018 took place on June 20. South Korea-based Bithumb disclosed that hackers stole around $31 million worth of cryptocurrencies. While the amount was smaller than the one in the Coincheck hack, it worried the cryptocurrency community because of the popularity of the exchange. Some sources reported later that the heist involved Ripple’s XRP coins, the third largest cryptocurrency in terms of capitalization.
Finally, on July 9, Israeli exchange Bancor issued a statement saying that a security breach, resulted in the loss of $23.5 million worth of ETH, NXPS and their own BTN coins. Bancor managed to resolve the situation partially by freezing $10 million in its own BNT tokens. It also said it was working with other exchanges to make it harder for the hackers to liquidate the ETH and NXPS coins.
Exchange or Wallet?
Overall, through the biggest hacks of 2018, more money was stolen than in the previous six years combined (around $550 million). However, substantial drops in the value of cryptocurrencies usually follow after the hacks as people lose their confidence in cryptocurrencies. Following the Coinrail incident, cryptocurrencies lost $42 billion in value over a weekend, according to Bloomberg. The hacks also raise questions regarding the regulation of cryptocurrency exchanges. And the BitConnect scam in which billions were stolen, also brings questions into the security of ICOs.
While most cryptocurrencies pride themselves on being secure, crypto exchanges are more vulnerable. That’s why one of the most important things to remember is not to keep cryptocurrencies on the exchange. Instead, users should stick to hardware wallets or find other physical means of storage. One man had $24 million stolen and now is suing AT&T, so whatever means you use to store your crypto make sure you’re being safe.
