08 Jul 2020 Marsha Tusk
Overview Of The Most Significant Crypto And Finance Hacks
Markets are finding new ways to operate due to the rise of the globalized economy worldwide. Digital currencies are becoming the new popular kid on the blockchain. Some arguе that the globalized economy and blockchain industry are incomparable when it comes to their size, but this becomes a less important factor as the time passes.
Some of the most popular data breaches and hacks that took place in both financial and blockchain markets are covered in this written piece. It is worth noting that due to the infancy of crypto exchanges, the amounts that are being stolen are still comparatively low to the traditional financial institutes like banks and hedge funds.
When thefts in the traditional monetary institutions occur, there is normally a loss of private data, including usernames, passwords, emails, social security numbers, license plate numbers, bank accounts, etc. 2019 remains in history as one of the most recognizable years, with over 4.1 billion data records being stolen just in the first six months.
Some of the most notable markets that started accepting and using cryptocurrencies as a means of payment are hotels, entertainment, gaming, travel, and social media industries. Different cryptocurrencies are being incorporated into the accepted payment methods, even if they are accepted as part of pilot projects. For instance, Steam, which is a leading platform for video games, ran a BTC payment test in the past.
A lot of online gambling companies in Canada and other countries have been offering casino games for Canadian players with cryptocurrency deposits. Crypto deposits were available even through self-issued tokens, offered by the gambling provider.
Crypto betting and gambling allows the anonymity of the individual involved in such activities to be kept in private. Users are given a chance to hide their financial records and logs too. Digital currencies have no borders and are accepted worldwide.
Mt. Gox Hack
This is one of the most notorious cases of a huge crypto exchange being hacked by fraudulent users. Mt. Gox was a Tokyo based leading crypto exchange. In 2013 over 70% of Bitcoin`s supply was going through the exchange.
Mt. Gox was successfully attacked in 2011 for the first time when hackers stole around 80,000 Bitcoins (BTC) from the founder of the company, Jeb McCaleb, who ironically was in talks for selling the exchange to Mark Karpeles. A hacker managed to infiltrate McCaleb’s account, which had administrative privileges. That action artificially dropped the price of Bitcoin from $17 to $0.01. In turn, hackers bought 2000 BTC and transferred them out of the exchange before the attack was even noticed.
In 2014, a group of hackers managed to hack Mt. Gox again, this time stealing the entire content from Mt. Gox’s cold wallet. Around 850,000 BTC were stolen, 750,000 of which belong to users of the platform. The rest was a possession of the exchange itself. The total value of lost BTC amounted to 460 million US dollars making this the most significant loss in the history of blockchain and cryptocurrencies.
Bitfinex
Bitfinex is one of the largest Bitcoin exchanges in the world as of now and it has been since 2012. Cyber-attacks on the exchange are nothing new for Bitfinex. The first breach took place in 2015 when hackers stole $400,000 from the company`s customers. In 2016, the company was hacked once again with 120,000 BTC missing from the exchange. The loot from the 2016 hack accounts for over $72 million in losses. The multi-signature system implemented at the time had a vulnerability, which was exploited and allowed hackers to get into the system.
These are two of the most prominent crypto exchange hacks. The traditional monetary firms are also no exception to being victims of thefts. It is important to note that cyberattacks cost financial firms much more, due to the sensitivity of the information that these companies keep. In comparison to the crypto exchanges, the loss is usually related to physical financial assets due to the fact that this is the place where people keep their money.
Looking back in history, if forcibly entering into a bank, thieves would have found a large amount of banknotes. Hacks that take place in the 21st century, can be much more severe as they may include the stealing of information and goods.
In 2018, attacks on SWIFT, which is a leading global network for money and security transfers, resulted in $1.8 billion loses. The actual losses were however much higher, as after the hack a brand new security team was hired in order to go through the whole system to find the flaw the hackers utilized, and then patch it. Additional security protection was developed after patching the breach as well.
Looking at the entire market, the overall losses of financial service providers per year are more than $17 billion, which keeps increasing on a year-on-year basis.
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