Cryptocurrency isn’t simply rewarding the bold. Some cryptocurrency exchanges have been compromised by hackers in the previous year, allowing them to steal billions of dollars in virtual assets. As many as 20 thefts this year where at least $10 million in cryptocurrency was stolen from a crypto exchange or project have occurred.
According to NBC News’ research, hackers stole more than $100 million from at least six different companies. According to the FBI’s yearly crime statistics, bank robberies netted culprits an average of less than $5,000 each robbery last year. They are frequently less attention-grabbing than more classic bank-robbing events, despite their enormous financial sums. A word of caution from cryptocurrency experts: Exchanges are increasingly profitable targets for hackers, they warn would-be investors. Esteban Castao, CEO and co-founder of TRM Labs, a business that creates solutions for corporations to oversee digital assets, stated, “If you attack a Fortune 500 company today, you could take some usernames and passwords.” In the event that you hack a cryptocurrency exchange, you may walk away with millions of dollars.
In this article, you will learn how crypto thefts happen and what are the ways to avoid potential losses and being a victim of crypto hackers.
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Crypto Thefts And What To Know About Them
Over the last several years, more than 300 firms have sprung up to make it easier for users to purchase and trade anything from bitcoin to “altcoins,” like the dog-inspired dogecoin, to invest and speculate in cryptocurrencies, making them a more popular investment and speculating tool. Cryptocurrency exchanges are similar to conventional money exchanges in that they establish values for several currencies and charge a small fee to allow users to swap one. In contrast, although a few nations have tight rules in place, it is very straightforward for digital entrepreneurs to start up an exchange and operate it in whatever way they like.
It is worth noting that as the popularity of cryptos increases over time the number of people who want to exchange digital assets increases. As a result, in order to make things easier, they use tools like Bitcoin Prime, which allows investors to make their trading process automated. As every second in the crypto market matters, with the use of AI this problem can be solved.
The word “encryption” is a component of the name of a lot of cryptocurrencies, which means they provide some level of protection. Nevertheless, the exchanges in charge of running them, particularly new ones starting from scratch, frequently have a small workforce, meaning few if any full-time cybersecurity specialists. Their engineers may rush to get the code to function, but they may leave holes in the system that hackers may exploit.
Criminal hackers see exchanges as an ideal target because of the volatility of the market, which often leaves them with unexpectedly large sums of money. Known as cold wallets, exchanges store a portion of their cryptocurrency in a secure, off-site location. “Hot wallets,” which may be transferred to users, hold the remaining funds.
According to Dave Jevans, the creator of CipherTrace, a business that analyzes cryptocurrency theft and fraud, if a hacker gains access to a specific employee account – a regular security failure on the internet – they may pull off a large robbery. According to Jevans, if an exchange is rich enough and has set aside money in case of a hack, it may reimburse its consumers. If they don’t, they’re more likely to go out of business.
How To Protect Your Cryptos
Keep an eye out for malicious actors, no matter where you keep your Bitcoin and private keys. Many frauds exist, but one of the most popular is sim swapping. The following is a classic sim swap fraud scenario. A two-factor authentication (also known as two FA) option is available when you first sign up for an exchange account. In order to get access to your account, a hacker would also need to obtain your login credentials and pass the two FA. To do this, they’ll contact your current phone provider and persuade them to switch your number to theirs. For two FA, “we flat-out advise never to use SMS text message for two FA if you can avoid it,” Neuman explains. Then in a few cases, there is no other choice but to send an SMS with an FA code.
Philip Martin, the chief security officer of Coinbase, recommends calling your carrier and requesting a password or other barrier to your account if you cannot avoid it. YubiKeys are considered by Martin to be “the gold standard for two-factor authentication,” so long as the exchange provides them. Devices may be authenticated by plugging in Yubico’s YubiKey USB hardware authentication key.
As soon as you’ve chosen a wallet service, the program will frequently produce a unique seed phrase or group of 12 to 24 random phrases, which may be used to retrieve your crypto wallet’s data. Additionally, your seed phrase should be stored offline in a safe area. As a part of your crypto wallet security precautions, you should also be wary of any communications you get from outside sources. “It doesn’t matter whether something seems too wonderful to be true,” Martin explains.