Cryptocurrencies like Bitcoin have a number of advantages over traditional forms of money. There’s just more safety and security in crypto than there are in fiat currencies -- nobody’s going to come up to you in a dark alley and demand you hand over the password to your Coinbase wallet. However, crypto isn’t nearly as secure as you might think.
It’s true that blockchain ledgers, the technology behind cryptocurrencies, are tamper resistant. However, as fully-digital currencies, crypto coins are still susceptible to online hacks and other attacks. In some cases, some very high profile cryptocurrency robberies have resulted in millions of value being lost. Here’s a few insane examples of massive crypto thefts and top cryptocurrency heists that you might have missed.
The $2 Million Inside Job
Not all crypto robberies involve hacking. In fact, in some cases, it turns out it’s frightfully easy to get away with it if you’re in a trusted position. That’s what prompted Joseph Kim, a trader working at Consolidated Trading LLC in Chicago, to funnel around $2 million worth of the firm’s Bitcoin and Litecoin out of company coffers and into his own.
Apparently, Kim was prompted to do so to cover personal losses he’d accrued trading crypto himself. However, after the truth came out in November of 2017, Kim had his day in court in February of 2018, where he was officially charged with wire fraud. He’s even made history, being the first person from Chicago to be charged over a cryptocurrency matter. Not a great way to end up in the Guinness Book of World Records, Joseph.
The Coincheck Hack
Our next crypto robbery comes out of Japan. The digital currency exchange known as Coincheck said that its Tokyo-based servers were hacked in the small hours of the morning on January 25, 2018. The results of the hack are catastrophic: something like $534 million worth of cryptocurrency was transferred from online Coincheck wallets to who knows where.
Coincheck personnel say that, for the most part, hackers made off with millions in NEM, a cryptocurrency launched in 2014. While its valuation might not be anywhere near Bitcoin, NEM is not exactly a bit player, considering how it was targeted by the Coincheck hackers. The exchange, which is popular in Asian markets, was raided by the Japanese government shortly thereafter to investigate the matter.
Iceland’s Great Crypto Mining Heist
When it comes to popular locations to host crypto mining servers, Iceland is up there with the best of them. Mining rigs generate a lot of heat, so naturally cold locations are perfect. Mining is also energy-intensive, but with Iceland’s investment in renewable energy sources, this also sweetens the pot for large-scale cryptocurrency mining.
Unfortunately, these far-flung locales aren’t so great when they lead to a string of burglaries that resulted in a number of these rigs going missing. In fact, from December 2017 to January 2018, four break-ins occurred in isolated regions. Not just a few rigs, either: investigators say upwards of 600 of these specialized computers have up and vanished into thin air. There have been 11 arrests so far, but these expensive mining rigs have yet to be recovered.
The DAO Hack
Back in the glory days of the internet - 2016 - developments in blockchain technology were pushing cryptocurrency to new heights. One of the first large-scale decentralized autonomous organizations, simply known as “The DAO”, had been created through a clever application of smart contracts on the Ethereum blockchain to create a venture capital fund that was quite popular at launch, generating some $150 million worth of investment action.
Unfortunately, flaws in the smart contract code left a vulnerability open, and one that an enterprising hacker capitalized upon. Around $50 million of cryptocurrency invested in The DAO was siphoned off, never to be seen again. The incident prompted one of the most well-publicized hard forks in cryptocurrency history as an attempt to recover the value of these lost coins. As a result, ithe the blockchain split and creating Ethereum and Ethereum Classic.
The Mt. Gox Bitcoin Robbery
Returning to the Land of the Rising Sun, we have the story of how Tokyo-based cryptocurrency exchange Mt. Gox “lost” $400 million in Bitcoin. Touted as the biggest cryptocurrency robbery of all time (up until Coincheck took that dubious crown), the Mt. Gox heist occurred in 2014. The haul was 850,000 Bitcoins, worth close to $450,000 at the time.
Over the years, some of those Bitcoins were recovered. However, around 650,000 are still missing. Mt. Gox, of course, didn’t survive the experience, and its CEO is now being charged with a litany of crimes by the Japanese government. Meanwhile, the perpetrators of this hack have never been caught -- as is typical of most cryptocurrency robberies.
Protecting Your Investment
It’s obvious by now that even with a handful of examples, cryptocurrency robberies can and do happen all the time. This doesn’t necessarily mean that your own crypto holdings are at risk, however. In fact, there are plenty of steps you can take to ensure your own cryptocurrency is kept safe and sound, far from prying eyes and sticky fingers.
First, it’s important to realize that in many cases, crypto robberies target online exchanges. This means that the best method for not having your own tokens swept up in such thefts is to keep your currency offline in a wallet on your desktop. Even better, keep a digital wallet on a USB thumb drive and keep it in a secure place. Keep the decryption keys in a separate but just as secure place as backup. This means that even if your computer or USB key is physically stolen, any thief will be unable to access your crypto investments without the keys to your kingdom.
While nowhere near commonplace, cryptocurrency robberies are something you need to be aware of. Taking the above steps, however, means minimizing the likelihood of being victimized.