Online crime has always been present, however, with the rise of crypto platforms, people manage to find new ways of breaking the law. There are rules and regulations put in place, with the sole purpose of putting barriers that will guard markets, users, and buyers.
Key Takeaways
- Cryptocurrency crimes have surged with the proliferation of crypto platforms, despite regulations aiming to safeguard markets and users.
- October 2022 witnessed the highest number of cryptocurrency breaches in a single month, totaling 32 attacks and surpassing $775 million in losses.
- Major cryptocurrency thefts have occurred throughout history, involving platforms like MT Gox, Linode, Bitgrail, Coincheck, and others, resulting in millions of dollars in losses.
- Security measures such as two-factor authentication have been effective in mitigating risks, but the irreversible nature of blockchain transactions poses challenges in preventing theft entirely.
These laws can’t prevent people from committing crimes but can make it harder. Another important aspect of regulations is to make a distinction between legal and illegal actions, and properly sanction those who break the rules.
As for statistics, October 2022 marked a significant milestone as it witnessed the highest number of cryptocurrency breaches in a single month. 32 attacks happened and the total losses exceeded $775 million.
Let’s take a look at the most scandalous cryptocurrency crimes.
Biggest Crypto Crimes
MT Gox
Between 2011 and 2014, over 850k Bitcoin was stolen, making it the largest cryptocurrency theft in history. Mt. Gox attributed the loss to transaction malleability, an underlying bug in Bitcoin.
Linode
In June 2011, Linode, a web hosting firm, was hacked, resulting in the theft of at least 46k BTC. That included losses incurred by Bitcoin, Bitcoin.cx, and Gavin Andresen.
BitFloor
In May 2012, BitFloor suffered a theft of 24k BTC due to an attacker gaining access to an unprotected backup of wallet keys, prompting the shutdown of the exchange by its creator, Roman Shtylman.
Bitgrail
In February 2018, Bitgrail lost $146 million worth of Nano (XNO) due to a hack, revealing vulnerabilities in small exchanges’ security practices.
Coincheck
In January 2018, Coincheck lost $530 million worth of NEM (XEM) tokens, attributed to a staffing deficit and inadequate security measures.
KuCoin
Hackers stole substantial amounts of various cryptocurrencies from KuCoin in September 2020, with Lazarus Group, a North Korean hacker group, implicated in the attack.
PancakeBunny
In May 2021, PancakeBunny fell victim to a flash loan attack resulting in the theft of $200 million, achieved by manipulating Binance Coin (BNB) prices.
Poly Network
In August 2021, a hacker stole approximately $600 million worth of digital tokens from Poly Network, returning most of the stolen funds after a public dialogue.
BadgerDAO
A phishing attack on BadgerDAO in December 2021 led to the theft of $130 million, facilitated by the injection of a malicious script via Cloudflare.
Bitmart
In December 2021, Bitmart suffered a hack resulting in the theft of approximately $200 million worth of various tokens from its hot wallet.
Wormhole
An attack on Wormhole, the Ethereum and Solana bridge, defrauded users of an estimated $328 million, ranking as the fourth-largest breach in DeFi history.
Ronin Network (Axie Infinity)
Ronin Network was hacked in March 2022, resulting in a loss of $620 million, affecting the popular Axie Infinity game’s publishers and Axie DAO.
Beanstalk
In April 2022, Beanstalk’s governance protocol was attacked, resulting in a theft of $181 million, with the funds used to repay a flash loan.
Horizon Bridge (Harmony)
Hackers stole $100 million worth of cryptocurrencies from Harmony Protocol in June 2022, affecting transactions between Ethereum, Binance, and Bitcoin blockchains.
FTX
In November 2022, hackers stole $323 million from FTX.com and $90 million from its US platform, although FTX claimed to have recovered significant amounts of stolen funds.
Can Cryptocurrency Scams be Avoided?
Security measures are certainly proactive and have decreased crime significantly. Unfortunately, they are not enough to prevent thefts and breaches. Due to the irreversible nature of blockchain, once someone uses a correct private key, there’s not much to be done. So, a potential robbery can’t be stopped.
One of the best security protocols put into place is the two-factor authentication. By never sharing your private keys or seed phrase, you can decrease the chances of someone breaching it to almost zero.
Disclaimer
FAQ
The most notorious include the Mt. Gox theft of over 850k Bitcoin, Linode's breach losing 46k BTC, and the Coincheck hack costing $530 million in NEM tokens.
By implementing security measures like two-factor authentication, never sharing private keys, and staying informed about the latest security practices.
The irreversible nature of blockchain transactions and sometimes inadequate security measures make cryptocurrency platforms appealing targets for cybercriminals.
