HomeCryptoSecurity breaches on Cryptocurrency Exchanges | Cryptocurrencies 107

Security breaches on Cryptocurrency Exchanges | Cryptocurrencies 107


The term “cryptocurrency” refers to all digital currencies that are secured using cryptography. During the time that it is stored in a blockchain, no centralized bank, government, or other financial organization can exert any influence over it.

The fact that cryptocurrency, sometimes known as “crypto,” is not controlled by a single institution is one of the most distinguishing features that sets it apart from traditional forms of cash. As a result of the fact that it is decentralized, there are literally thousands of different crypto currencies from which to choose. The two cryptocurrencies with the highest name recognition are Bitcoin and Ethereum. Both of these digital assets are stored on their own blockchains.

In theory, bitcoin may be used to purchase and sell goods and services just like any other type of cash. This is only a theory, though. But, over the last several years, an increasing number of people have begun to see new cryptocurrencies in the same way as speculative stocks. Bitcoin and other cryptocurrencies are bought in large quantities by people who are betting that their value will go up in the future. In such instance, they will have something that they may sell in order to make a profit. The value of coins can plummet precipitously in a matter of minutes, which makes it difficult to win bets on them.

Those who invest in cryptocurrencies are exposed to a variety of risks, not the least of which are scams known as pump-and-dump and rug-pulling. Even if the price of the cryptocurrency you hold remains the same or goes up, you could still suffer financial loss if your account is compromised by hackers.

Photo by Jievani Weerasinghe on Unsplash

Phishing

Phishing through email is when hackers send their victims emails in an attempt to fool them into doing some kind of criminal action, such as installing malware or handing away sensitive information. Often, the email will include a harmful link that, when clicked, will cause malware to be downloaded into the machine of the receiver. A piece of malware like this gives an adversary the ability to watch a device covertly or even take control of it. If the victim has software known as a hot wallet installed on their smartphone, it will be much simpler for a hacker to steal their money.

Exploits

Hackers frequently focus their attention on the software that is employed to make the storage and transfer of cryptocurrency possible. Every component of the cryptocurrency infrastructure might have flaws or vulnerabilities that have not been addressed, regardless of whether it is a cross-chain bridge or a cryptocurrency exchange. If hackers locate these vulnerabilities, they will be able to exploit them in various types of attacks, including bridge attacks and exchange heists.

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Ronin Network

The Ronin Network was the victim of a cyberattack, which resulted in a loss of around $625,000,000.00 in total funds. Axie Infinity, a blockchain-based video game, is dependent on the Ronin Network, which is a side chain (a component of a bigger blockchain). The hacker made off with secret keys and then utilized those keys to commit fraudulent withdrawals, which resulted in the loss of hundreds of millions of dollars from the system. It had been a whole week before anybody recognized that there had been a security breach.

Beanstalk Farms

The Beanstalk Farms platform is an Ethereum-based stablecoin infrastructure that can be used by users. (Stablecoins) are digital currency tokens that, owing to the design of the system on which they are based, are not susceptible to price fluctuation. This prevents them from being used as a medium of exchange in speculative markets. The platform’s in-house governance token, STALK, was used by the protocol throughout its operation. Before any asset may be transferred outside of Beanstalk Farms’ control and into the possession of a third party, the corporation needs the consent of the great majority of STALK shareholders.

Mt. Gox

In 2010, the bitcoin trading platform known as Mt. Gox was established in Tokyo, Japan. This particular exchange handled more than seventy percent of all Bitcoin transactions at one point in time, making it the largest cryptocurrency exchange in the world at the time. In 2011, a hacker made off with 8.75 million dollars’ worth of bitcoin from the exchange.

Despite previous assurances that safety would be increased, the exchange was attacked once again in 2014. But, this time around, it was carried out on a somewhat larger scale. Bitcoins with a value of around $815 million went lost. They were successful in achieving their objective by inundating the exchange with fraudulent bitcoins. When something like this took place, it was one of the first times the security of bitcoin had been seriously breached.

Because of the breach, the corporation is being taken to court by various business partners, including customers and suppliers. Mark Karpeles, who had previously served as CEO of the exchange and had a significant role in a number of these episodes, was the one at fault for the absence of version control software on the site’s source code.
It would only take one negligent programmer to endanger the integrity of the whole system by making changes to the code of the website. The users have not profited from legal action taken against the exchange as of yet. In an attempt to make amends with its clientele, the exchange has presented a civil repair plan to the Tokyo District Court.

KuCoin is a Singaporean cryptocurrency exchange. It began operations in 2013, and accepts Bitcoin, Ethereum, Litecoin, and Ardor as payment. Almost $281 million worth of coins and tokens were stolen in a hack that occurred in September of 2020.

Moreover, thieves stole the private keys to some of the most popular wallets on the trading platform. KuCoin took swift measures to halt all transactions on the platform, but the harm was already done. As compared to other crypto asset hacks, this one ranks high.
KuCoin’s leadership immediately began an in-depth inquiry as a result. Quick action paid off, as nearly $204 million was recovered in a matter of weeks. The conversation has also helped narrow down the pool of possible perpetrators.

It is speculated that a North Korean hacking collective was responsible for the incident. The need for prompt response and real-time transaction tracking is highlighted by this scenario. Moreover, the exchange intends to compensate all users for their losses.

FTX

Troubled cryptocurrency exchange FTX, which is now going through a bankruptcy procedure, was hacked on November 12, 2022. Reports and the company’s official Twitter account suggest that when FTX filed for Chapter 11 bankruptcy, an employee named Ryne Miller claimed that improper transactions had occurred. Some sources estimate that USD $60 million was taken in the FTX attack. There is speculation that a novice employee made the transfer of cash to a Kraken wallet, albeit this cannot be confirmed.

Although facing several accusations in a bitcoin lawsuit that carry a potential penalty of 115 years in jail, former CEO Sam Bankman-Fried is presently out on $250 million bond.

Crypto.com

One of the most widely used cryptocurrency applications and well-known exchanges, Crypto.com was the first to be compromised in the cryptocurrency market in 2022. On January 17th, news surfaced that 483 customer accounts had been hacked. The exchange had to temporarily suspend certain of its services for 13–14 hours due to a security breach, the reason of which has not yet been determined but was verified by Crypto.com’s CEO, Kriz Marszalek. The prominent cryptocurrency exchange had 4,836.26 ether (ETH), 443.93 bitcoin (BTC), and almost US$66,200 in other currencies stolen.

1-Higgins, M. (2022, December 9). The biggest crypto hacks of 2022. NordVPN. https://nordvpn.com/tr/blog/crypto-hack/

2-Groves, K. (2023b, March 14). List of Crypto Exchange Hacks: Updated For 2023. HedgewithCrypto. https://www.hedgewithcrypto.com/cryptocurrency-exchange-hacks/

3-A. (2023, February 21). The 10 Biggest Crypto Exchange Hacks In History. Crystal Blockchain Analytics for Crypto Compliance. https://crystalblockchain.com/articles/the-10-biggest-crypto-exchange-hacks-in-history/

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