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According to a new report from blockchain analytics firm Crystal Blockchain, $ 7.6 billion worth of cryptocurrencies has been stolen since 2011. The total figure splits into two sadly predictable buckets: hacks and scams.
The report found that $ 2.8 billion was stolen due to security breaches, the most popular breach being carried out via the security systems of a cryptocurrency exchange. In total, the company documented 113 security breaches; the biggest of these was the Coincheck breach in 2018, which saw hackers run away with over $ 535 million worth of NEM coins.
The United States, Japan, the United Kingdom, China, and South Korea suffered the most trade security breaches. US crypto services have been targeted 13 times, topping the list.
Read more: Social Engineering: A Plague on Crypto and Twitter, Unlikely to Stop
Another $ 4.8 billion was stolen via scams, with Crystal Blockchain identifying 23 major fraud schemes.
“We considered $ 7.6 billion as the total amount for all the years combined into one sum. Basically a cumulative sum for the past 10 years, ”said Kyrylo Chykhradze, Crystal Blockchain’s product director.
In terms of stolen value, China leads the pack. The report attributed its ranking primarily to the Ponzi PlusToken 2019 scheme ($ 2.9 billion) along with the WoToken 2020 scam ($ 1 billion) which was linked to PlusToken.
Most of the crypto exchanges that were breached had insufficient security and low-level verification for withdrawals, such as just an email or phone number.
In the case of Coincheck, for example, the company kept most of its resources in a wallet connected to other external networks. It also lacked multi-signature security altogether, which would have required multiple key holders to sign before the funds were transferred.
Read more: Multisignature wallets can keep your coins more secure (if you use them correctly)
Chykhradze said the main reason for vulnerabilities in technology is that the industry continues to evolve at a very rapid pace and more and more entities appear on the market with inadequate and “neglected” internal security policies.
“Their security policies are neglected because these new services cannot afford (financially) to pay the same attention to such security concerns, while established entities are in a better position to ensure and prioritize security,” he said. in an email to CoinDesk. “This results in newer services becoming selectable opportunities for bad actors who can spot these vulnerabilities.”
Hackers are becoming more sophisticated
The report’s conclusion doesn’t offer much positive. He notes that the number of attacks has remained high in recent years. Large-scale exchanges, which apparently would have better security measures, have also been breached. The report also predicts that as the methods used by hackers have continued to become more sophisticated, attacks will continue to grow in number.
Chykhradze said they see SIM trading on the rise; this scam is industry independent, it plagues cryptocurrency players as well as those from other industries.
“But what has really changed and developed is the way these criminals launder stolen funds. These entities look into services to understand theirs [anti-money laundering/know your customer] coin policies and policies for privacy in the service offering, “he said.
“Services with lower barriers for KYC or coin entry for privacy are better opportunities for recycling. This is another critical point to consider in the security of crypto services, how can we make laundering of stolen funds nearly impossible for bad actors? “
As a workaround, some basic security measures have been recommended for all crypto exchanges, particularly when exchanges use hot wallets. One is having adequate insurance for special cases, a second is maintaining an in-house security team, the third is using blockchain analytics software, and the last is making sure they have assets in reserves equivalent to the amount of cryptocurrencies in storage. online.
“We can assume that the number of attacks and schemes will continue to grow with the growth of the blockchain sector and the cryptocurrency market,” said Chykhradze, “especially with this latest bitcoin bull run we are currently experiencing and the influx of new ones. business”.
