How hackers shook the blockchain community in 3 of the worst crypto hacks
How hackers shook the blockchain community in 3 of the worst crypto hacks
Blockchain

How hackers shook the blockchain community in 3 of the worst crypto hacks

By Giorgi Mikhelidze - 16 Dec 2019

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From the invention of Bitcoin there have been several crypto hacks and some of those can be described as the worst in the blockchain history.

In all periods of human history, technological advancements have brought significant changes in the way we live and experience things. And if we were to name any particular invention that had the biggest impact on our lives, it’s definitely the Internet.

The Internet has brought people closer to one another, alleviated geographical and political borders, automatised the majority of our work… It has contributed to the improvement of the world we live in.

However, it has never been just a tool for improvement. Unfortunately, the rise of the Internet gave people with bad intentions an upper hand over our security and private data. The online world knows that hackers are one of the biggest threats to this ecosystem and they’re the ones that we have to fight every single day.

Cryptocurrencies introduce more security

In 2008, an idea about creating the most secure ledger system with protective firewalls was put forward by a group or individual with an alias, Satoshi Nakamoto. They eventually developed blockchain and bitcoin.

In a short amount of time, cryptocurrencies became a worldwide hit. Individuals, businesses, financial institutions, and even governments started to turn their attention to these digital currencies in the efforts to make their everyday tasks simpler and more efficient. For instance, as this trader review shows, the brokers that operate on various markets incorporated Bitcoin, Ether, and other cryptocurrencies to help their customers make more secure and convenient payments.

However, while this new development was really revolutionary in the monetary system, it still wasn’t successful in removing the hacking threat altogether. While hackers find it incredibly hard to physically change the transaction records on blockchain and direct them towards their accounts, with methods like phishing, they manage to gain control over users’ crypto-wallets.

So, let’s take a look at three of the most egregious crypto hacks that turned things upside-down in the crypto community.

Mt. Gox worst crypto hack: $460 million stolen

In 2013, Mt. Gox was considered the biggest Bitcoin exchange market in the world. The company accounted for more than 70% of all exchanges globally and for hackers, it was the most suitable victim.

The initial attack happened in 2011, when the exchange’s founder and owner, Jed McCaleb got hacked. As a result, about 80 thousand Bitcoins were stolen which, at that time, were equal to around $1,360,000. Not long afterward, another hack occurred when a hacker got into McCaleb’s exchange account and dropped the BTC price from $17 to $0.01. This resulted in 2,000 BTC being bought and then withdrawn from the system.

But these two attacks were nothing compared to what was about to become the most expensive crypto hack the world has ever seen. From 2011 to 2014, in a series of undercover attacks, an anonymous group of hackers stole about 850,000 Bitcoins, from which 750,000 belonged to private users, while the rest was on the exchange’s database. 

As a result of the attack, Mt. Gox had to go through a lot of turbulence: not only did its founder go on trial in Japan, it was even forced to announce bankruptcy and shut down all its services completely.

Back then, 850,000 BTC was around 460 million US dollars, which is already the biggest crypto hack in the history of digital currencies. However, if we consider the 2019 Bitcoin prices – 1 BTC=$7,200 – this number reaches astronomical heights… If someone were to steal 850,000 BTC tokens today, they’d actually take 6.12 billion US dollars! No wonder this attack is still considered the most shocking one yet.

$64 million stolen in a NiceHash hack

The second-most significant attack on cryptocurrencies in our list is the NiceHash hack. A Slovenian Bitcoin mining platform called NiceHash, which bought and sold people’s computing power for Bitcoin mining, was attacked in 2017 by hackers with some serious financial implications.

The hack “miraculously” coincided with the Bitcoin price surge in 2017 as it reached a $20K exchange rate. That’s why the stolen 4,700 BTC amounted to about $64 million at the time. The scale of this attack was so large that the platform closed all of its services and operations for a full day to conduct the investigation.

Despite the hack being overly destructive for the Slovenian company, they still initiated a program that would repay the lost digital money to users affected by the hack. The program began in 2018 and as of now, it has successfully covered 81% of total stolen funds. 

North Korea and the macOS as its target

The last, but not least, this crypto-hack is somewhat peculiar because there are no hidden hackers or anonymous groups behind it. The whole execution is believed to be backed and financed by North Korea.

North Korea has been on a divergent route from the rest of the world for at least half a century. And it’s been developing nuclear and hydrogen bombs, putting its population under severe oppression, and in general, doing very nasty stuff. As it turns out, cryptocurrencies are the country’s current target.

Just recently, some three months ago, the US government has reported that the North Korean-funded hacker group called Lazarus Group was attempting to hack into millions of Mac users using their own crypto software. As it turns out, the group had created a fake company operating on a cryptocurrency trading market.

The software contained a piece of malware that was quickly spread into the whole interface after the installation. It then gave the hackers access to everything the Mac owner possessed and stored on that computer. 

And even though there are no records of how much money the Lazarus Group stole from crypto users, the UN claims in its report that the country has stolen about $2 billion dollars over the years by this and other hacking cases, including conventional cyber-attacks on banks and financial exchanges.

The Internet – a double-edged sword

All those attacks are a demonstration of just how hazardous people can get. And as the technologies move forward, their resourcefulness grows along with it. It’s not to say that the internet was an unfortunate invention. It has taken our lives to a whole nother level in so many areas, be it communication, work, shopping, or entertainment.

However, hackers are also keeping up with this rapid pace of development. The Mt. Gox, NiceHash, and macOS attacks showcase that even the most protected crypto platforms can be compromised.

And it only takes one mistake from the crypto wallet owner – once their credentials are disclosed, hackers can do pretty much everything. Methods like phishing are most popular among the cyber-attackers who present their malicious software under the guise of a famous website and once you type in your login and password, it directly gets into their hands. So, make sure you keep a close eye on your financial accounts!

 

Giorgi Mikhelidze
Giorgi Mikhelidze

Giorgi is a Georgia software developer with two years of experience trading on the financial markets. He is now working to spread the knowledge about the Blockchain in his country and share all of his findings and research to as many crypto enthusiasts as possible.

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