More than 980,000 - this is how many bitcoins were stolen by hackers in cyber-attacks on crypto-exchanges. Scammers steal altcoins as well. Losses of BitcoinCash, Litecoin, Nem, and others coins are constantly growing.
Skills and knowledge of criminals are improving, and the methods they use become even more sophisticated. It is rather difficult to return stolen coins, because among the owners of exchanges there are unscrupulous specialists who participate in frauds in their own crypto companies. Therefore, each crypto-owner before they begin to invest money should get familiar with the history of crypto exchanges hacker attacks.
First Attack
In October 2013, the first bitcoin fraud was recorded. Silk Road, located in the onion zone of Tor's anonymous network can be called an alternative to eBay or Amazon for selling illegal goods, such as drugs, weapons, and pornography. In addition, some users stored their crypto-coins on Silk Road. All payment transactions were made in bitcoins for two years (2011-2013), the total volume of transactions amounted up to 9.5 million BTC.
This company caused interest of the FBI. In 2015, founder of the company William Ross Ulbricht was sentenced to life imprisonment for drug trafficking, hacker attacks, and collusion in money (bitcoin) laundering. This crime marked the beginning of fraud on crypto-exchanges.
The Largest Attacks on Crypto-Exchanges
A year after the closure of Silk Road, a number of attacks on MtGox happened. One of the most popular crypto-exchanges (in 2013, 47% of transactions in the Bitcoin network were made through this website) lost 850,000 BTC, which is a record amount currently.
The story of the coins theft began 7 years ago when the private keys of the MtGox key were stolen by copying file wallet.dat. Then hackers got access to a lot of bitcoins, began to control the input and withdrawal of funds, as well as deposits coming to the exchange. According to the American investigation, for several years with the help of compromised keys fraudsters devastated accounts and transferred all the coins to the wallets that belonged to Alexander Vinnik - he is called a technical specialist of the Russian crypto-bureau BTC-E, although representatives of the Internet site of trading in currency and crypto- real-time connection with Vinnik deny. At the moment, an investigation is under way.
In February 2014, MtGox stopped trading when CEO Mark Capler, against whom the Japanese court opened a criminal case for articles related to fraud and money laundering, reiterated the ongoing hacker attacks and the theft of bitcoins. But, according to a year after the closure of the report, the crypto currency was stolen in 2011. To recover damages, the exchange sold bitcoins and Bitcoin Cash for $ 406.6 million. In May 2018, trustee MtGox Nobuaki Kobayashi transferred 8200 BTC from the bankruptcy address, which put pressure on the bitcoin rate - it fell by 6.5%.
The Hacker attacks did not bypass the other significant currency exchange - Bitfinex. The Hong Kong company positioned itself as the most reliable and inaccessible for swindlers exchange where for each client wallets with polysemantic identifiers are selected. But in reality everything turned out to be much worse. In August 2016, cybercriminals kidnapped 120,000 BTC, or about $ 72 million at the rate for that period of time. The main leakage of funds occurred through the processing service BitGo, with which Bitfinex cooperated. A month later, the stock exchange began to pay off debts with the help of issued BFX tokens and already in April 2017 repaid all debts to investors.
At the moment Bitfinex actively works, it is in TOP-10 of the world's best crypto-exchange exchanges, but sometimes it is subjected to various attacks, which makes many experts question the integrity of the company.
Another major hacking occurred at the leading Japanese crypto-exchange CoinCheck. Hackers who were outside the country infected the internal network of the trading platform with a virus that was transmitted via mail and kidnapped private keys. As a result, in January 2018, 523 million NEM coins were stolen for $ 533 million at the exchange rate at the time of the theft. The incident was due to a negligent attitude to the storage of this crypto currency, because the exchange did not use smart contracts with multi-signature, and all the coins were stored in one purse.
Two months after the hacking attack, the CoinCheck management started paying out 260,000 affected customers to the exchange. For each stolen NEM, 88,549 Japanese yens were offered ($0.83). After a massive hacking, the exchange became part of the online broker Monex Inc. Now, as CEO Oki Matsumoto said, the company plans to enter the US market and win the trust of more users.
Hacker Attack by the Administration
In July 2014, an attacker under the nickname Lucky7Coin introduced a Trojan program into the Cryptsy code (the site does not work) - the exchange, which worked with many crypto-currencies, and got access to Bitcoin keys - 13,000 were kidnapped, and 300,000 are stolen from Litecoin. The administrators of the exchange were familiar with the fraudster. Two months before the robbery, the attacker sent a letter where the hacker introduced himself as Jack and reported that the former owner of the nickname had died. After the attack of the owner of the company, Paul Vernon was accused of stealing 11,000 BTC and the destruction of evidence in the commission of illegal actions. Clients of Cryptcy believe that the currency could be laundered through another crypto-exchange, Coinbase. As a result, the District Court of the Southern District of Florida ordered Vernon to pay customers $ 8.2 million.
The second case, which was connected with the head of the exchange, occurred in the British MintPal (the site does not work). It was considered one of the best trading platforms until the autumn of 2014 the leadership was changed. The company was sold to Moopay CEO Ryan Kennedy, known under the pseudonym Alex Green. He stole 3894 BTC during internal works and bankrupted the exchange. It is noteworthy that a few months later, after the withdrawal of funds, Kennedy was sentenced to 11 years in prison for rape and, despite the fact that the British police investigated the fraudulent case, the verdict lacked an item about the theft of $1.5 million in bitcoins.
More than $170 million in 2018 was stolen from the Italian currency exchange Bitgrail. According to the owner Francesco Firano, who is known by the nickname "The Bomber", as a result of "unauthorized transactions" 17 million XRB (Nano / RaiBlock) were withdrawn from accounts. Representatives of Nano denied this information and said that there were no mistakes. It is worth noting that the remaining tokens stored on the exchange have not suffered. After the attack, Bitgrail declared itself bankrupt.
Consequences of Hacker Attacks
Cybercrimes on the exchanges affect the price of cryptocurrencies, whose value is restored to its former values only after a few months. Hackers carry out attacks not only for the purpose of stealing money. Many burglaries are committed for the sake of the collapse of the course of any crypto currency. After all, inexperienced players of the market and there are a lot of them, with negative information quickly start selling their tokens to Fiat money.
The likelihood of such thoughtful tactical attacks with the development of the market and fierce competition on it will grow. Coins, as seen in the examples above, can disappear even from the largest and seemingly protected exchanges. Therefore, the issuers of tokens should take into account all possible risks associated with volatility, which may be affected by hackers.
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