The Largest Hacks Of 2018 In The Crypto Industry
Cryptocurrency has experienced a year filled with both good and bad qualities. As crypto grew this year, so did the amount of questions on security. According to blockchain security entity CipherTrace, $927 million was stolen this year from cryptocurrency-related platforms and exchanges. The research appeared Cryptocurrency Anti-Money Laundering of 2018 Q3. This report also showed that this year, 3.5 times more was stolen this year than in 2017.
In addition, it also indicated that the cybersecurity theft could reach over a billion dollars and that some firms already believe that it has. As the report states,
“This data indicates a patter of smaller robberies on a regular basis and sophisticated professional cyber thieves who carry out hacks at both the exchange and platform levels by capitalizing on exposed vulnerabilities, as well as by socially engineering employees who work at these companies.”
The big question that arises is how hackers have managed to steal so much this year. Interestingly enough, research data shows that the most significant hacks have taken place in the last five years. One of the most prominent hacks occurred against Japanese exchange Coincheck.
Coincheck and its investors lost $530 million NEM coins and such a hack surpassed the amount of the famous Mt Gox hack, which was $80 million. Many have been wondering why hackers were so successful. Some believe it has to do with the fact that Coincheck kept its coins in a “hot wallet,” which is a digital storage tool that connects online, as opposed to a “cold wallet,” which is a digital storage tool that does not connect online. The most secure entities tend to store their funds offline in a cold wallet.
The NEM foundation recorded to the hack by acting on a hard fork software update that made the stolen coins valueless. The fork led to the creation of a tagging system so that hackers could not transact using the coins.
Less than a month after Coincheck was hacked, another firm Bigrail was hacked of its nano coins valued at $195 million. When it comes to the Bigrail hack, some have argued that the platform was involved. For example, Fortune reported that Bigrail stopped all deposits and withdrawals of its coins a few weeks before the hacks tool place. The platform also announced it would start enforcing its identity verification measures. Such unexpected policy changes led users to wonder that the “exit scam” was bound to happen. Thereafter, the government seized the entity’s assets.
After Bigrail, hacks occurred on smaller exchanges that caused the loss of millions of dollars. A South Korean exchange Coinrail indicated that hackers had stolen around $40 million in cryptocurrencies and fortunately, the platform was able to recover two-thirds of the funds so reopen for businesses.
Then, Bithumb, another South Korean Exchange, experienced a hack. Though smaller than Coinrail’s hack, the cryptocurrency community was especially surprised by this one. Several reports indicated that assets were stolen from the exchange and that XRP was somehow involved.
Bancor, Israeli-based token development platform and exchange, experienced the fifth largest hack. The platform was hacked of $23.5 million due to the breach. In response, the platform froze $10 million in its native coin, BNT. This led to criticism from the community because the freeze indicates that the platform is not completely decentralized.
According to CipherTrace, a research firm, 97 percent of Bitcoin payments were from addresses from those in countries that do not have strong anti-money laundering laws and that hackers had laundered $2.5 billion. On the upside, several of the world’s governments have noticed the danger of the weak laws and changed their policies.
Dave Jevans, CEO of CipherTrace, stated,
“Different geographies are competing on regulations and trying to become ‘trusted’ digital currency hubs in order to grow their economies. We will see the opportunities to launder cryptocurrencies greatly reduced in the coming 18 months as cryptocurrency AML regulations are rolled out globally.”
Japan has also enacted standards to secure the cryptocurrency industry, called the Virtual Currency Act. This Act developed a method for exchanges to license for their operations, contingent upon meeting standards of government requirements. The government will shut down the exchange for failure to comply.
The hacks and the regulations may change the market in 2019.