The Greatest Crypto Hacks Explained [2023]

Crypto hacks have been a major issue since the creation of cryptocurrencies. They resulted in the loss of billions of dollars in digital assets.

In this article, we look at the rise of cryptocurrency hacks, how crypto hackers work, and the largest crypto hacks in history. We also explore effective measures to improve your security and protect your assets from digital attacks.

By following these practices, you can reduce the risk of being a victim of cyber-attacks and learn more about the future of the security of decentralized platforms.

Let’s begin!

What are Crypto Hacks?

Cryptocurrency hacks happen when unauthorized individuals gain access to and steal virtual currencies from cryptocurrency platforms, such as exchanges and crypto wallets. These hacks have been a major issue since the creation of cryptocurrencies and have resulted in the loss of billions of dollars in digital assets.

Only in 2022, investors have lost almost $3.8 billion to crypto hackers.

The rise of cryptocurrencies has led to a surge in hacking incidents that aim to exploit vulnerabilities in the digital currency infrastructure.

Despite the efforts of crypto exchanges and wallet providers to enhance security measures, cybercriminals have continued to target these platforms, leading to significant losses for both businesses and investors.

Over the years, there have been numerous cryptocurrency hacks, which have highlighted the need for improved security measures and greater regulation in the cryptocurrency industry.

How Crypto Hackers Work

Cryptocurrency hacks are sophisticated cyber-attacks that exploit vulnerabilities in the digital currency infrastructure. Hackers use a variety of techniques to gain access to cryptocurrencies, such as stealing private keys, exploiting software bugs, and phishing.

One of the most common methods hackers use is phishing, where they trick users into providing their login credentials or private keys. Hackers may create fake websites or emails that appear to be legitimate, tricking users into entering their information. Once the hackers have obtained this information, they can gain access to the user’s crypto wallet and steal their digital assets.

Another common technique is exploiting software bugs. Crypto exchanges and wallets may have vulnerabilities that can be targeted to gain unauthorized access. In some instances, hackers have been able to manipulate the system to transfer funds to their accounts.

Additionally, hackers may use social engineering to gain access to crypto accounts. They may impersonate legitimate cryptocurrency businesses or individuals to gain the trust of their targets and then use this trust to obtain any sensitive information they need.

The types of hacks that happen in the industry can vary widely, from small-scale attacks that target individual users to large-scale breaches that affect entire exchanges.

11 Largest Crypto Hacks

With the rise of cryptocurrency, there has also been an increase in hacking attacks. Here, we will discuss the eleven largest crypto hacks in history.

#1. FTX

One of the most significant cryptocurrency exchange hacks happened in May 2021 on FTX, a popular trading platform. The breach resulted in a loss of $415 million, making it one of the largest hacks in crypto history.

Since the hackers exploited a flaw in the platform’s hot wallet, FTX immediately put a hold on all deposits and withdrawals, and CEO Sam Bankman-Fried used Twitter to explain the situation to users. The hack was a surprise to many because of FTX’s robust security measures.

The stolen funds made up about 8.5% of FTX’s total assets, and the company was determined to recover them. The hackers tried targeting other platforms, including Binance, Coinbase, and Huobi. The company offered a $10 million bounty for anyone who could provide information that would help them recover the stolen funds.

FTX recovered approximately 90% of the stolen funds and covered the remaining losses with its funds. Following the attack, FTX implemented additional security measures and conducted a thorough investigation. This incident highlights the importance of robust security measures in the cryptocurrency industry.

#2. Ronin

On November 14, 2021, the Ronin Network, a popular decentralized exchange built on top of the Ethereum blockchain, became the target of a sophisticated attack in which over $120 million worth of cryptocurrency was stolen. It included Ethereum (ETH), Wrapped Ethereum (WETH), and other tokens, such as Axie Infinity Shards.

The attackers found a vulnerability in the network’s smart contract and transferred the stolen funds to various addresses. The Ethereum community, upon which Ronin depends, has launched several initiatives to improve the security of decentralized exchanges and applications built on top of the Ethereum blockchain.

One of the most promising initiatives is the Ethereum 2.0 upgrade, which aims to address the scalability and security issues of the network. The upgrade is in progress, and we can expect the network to become more secure and resilient. During the second half of 2023, we can expect the “Shanghai upgrade,” and experts speculate it will have a great impact on the economy.

#3. Poly

In August 2021, Poly Network, a DeFi platform built on the Binance Smart Chain, Ethereum, and Polygon blockchains, fell victim to one of the largest crypto thefts in history. Thanks to a flaw in the Poly Network’s smart contracts, the hacker stole $610 million worth of cryptocurrency.

Poly Network quickly responded to the hack by urging cryptocurrency exchanges to freeze any assets linked to the hacker’s addresses. The hacker, who initially was anonymous, started returning the stolen funds only a few days later.

His excuse was that he did it for fun because he wanted to experiment and expose vulnerabilities in the platform. In the end, the Poly Network team offered the hacker a job as their chief security advisor.

While the hacker returned the stolen funds, the hack was a reminder of the potential risks involved in investing in cryptocurrencies.

#4. Binance

The first time Binance was hacked, the hackers stole over $40 million worth of Bitcoin from Binance’s hot wallet. The hack occurred when hackers obtained API keys, two-factor authentication codes, and other information needed to make withdrawals from the exchange. Binance was quick to respond and suspended all deposits and withdrawals following the hack.

The previous hack happened in March 2018, when hackers stole $3 million worth of various cryptocurrencies. After the 2018 hack, Binance implemented new security measures, including the Secure Asset Fund for Users (SAFU), which protects users against future hacks.

The crypto hack was a major blow to Binance and the cryptocurrency industry as a whole.

Binance has since improved its security protocols, including adding more layers of protection to its hot wallets and increasing its bug bounty program to encourage users to report vulnerabilities.

#5. Coincheck

In January 2018, the Coincheck hack resulted in the theft of more than $500 million worth of NEM cryptocurrency from the Japanese exchange. Hackers gained unauthorized access to the exchange’s hot wallet due to a security breach.

Coincheck discovered the hack when they noticed an abnormal amount of cryptocurrency was being transferred out of their exchange. The hackers stole around $530 million worth of NEM tokens at the time.

The Coincheck hack had a significant impact on the cryptocurrency market, causing the value of NEM and other cryptos to drop significantly. The exchange suspended all trading and withdrawals while it investigated the hack and implemented new security measures.

#6. Bitfinex

In 2016, Bitfinex, a Hong Kong-based cryptocurrency exchange, was hacked, losing $65 million worth of bitcoin. The hacker exploited a vulnerability in Bitfinex’s multi-signature wallet structure, which let them steal funds from multiple users in one go. To cover their tracks, the hacker used a technique called “tumbling” or “chain of wallets” to make the movement of the funds less obvious.

After the hack, Bitfinex issued IOU tokens to affected users, representing their stolen funds, and promised to redeem them for Bitcoin once the exchange recovered them. However, not everyone was happy with this solution, and some accused Bitfinex of trying to hide the true consequences of the hack.

The incident led to greater scrutiny of other exchanges and their security measures. As a result, many exchanges have since implemented more robust security measures, including multi-factor authentication and cold storage of funds.

#7. Nomad Bridge

Nomad Bridge was a decentralized finance platform that allowed users to earn interest on their cryptocurrency holdings. In November 2021, the platform lost approximately $250 million worth of crypto due to a hacking incident.

The hackers exploited a vulnerability found in the platform’s smart contract code, allowing them to drain the platform’s liquidity pools. As a result of the attack, Nomad Bridge had to shut down.

The Nomad Bridge hack highlights the risks associated with a decentralized finance platform. While these platforms offer many benefits, such as increased accessibility, they are vulnerable to different types of security breaches.

Due to their decentralized nature, these platforms don’t have a central authority that can monitor and protect users’ funds. Instead, they have to rely on the platform’s developers to ensure their funds are secure.

#8. Bitmart

In July 2021, Bitmart, one of the leading cryptocurrency exchanges, suffered a massive hack when it lost millions of dollars’ worth of cryptocurrencies.

The hack was discovered on July 13th, when Bitmart’s security team detected a large-scale transaction of various cryptocurrencies from its hot wallet system. The team immediately suspended all withdrawals and deposits and launched an investigation.

According to the official announcement, the hackers exploited a vulnerability in the exchange’s hot wallet system and stole approximately $200 million worth of various cryptocurrencies, including Bitcoin, Ethereum, Binance Coin, and other altcoins.

#9. Mt. Gox

Mt. Gox was once the world’s largest bitcoin exchange, but it filed for bankruptcy in 2014 after losing 850,000 bitcoins (worth around $460 million at the time). At the time, this exchange handled approximately 70% of all Bitcoin transactions worldwide.

The exchange had a history of security issues with previous hacks, including one in 2011, when around 2,000 bitcoins were stolen. The 2014 hack was particularly devastating, resulting in the loss of approximately 850,000 bitcoins.

The exact details of the hack remain unclear, but it’s believed that the hackers found a flaw in Mt. Gox’s system to gain access to the exchange’s hot wallets.

The consequences of the Mt. Gox hack were severe, with many users losing their life savings. However, it also led to some positive developments within the industry. Exchanges and developers began to take security more seriously, leading to the development of new tools and protocols aimed at preventing similar incidents in the future.

#10. Beanstalk

Beanstalk is another notable hack victim that happened in 2015. The platform was a popular multi-signature wallet created by two developers, designed to provide an added layer of security by requiring multiple signatures to access funds. When the wallet was hacked, the attackers made off with 38,000 Bitcoins, worth approximately $1.3 million at the time.

As you can see from the pattern here, the hack was again possible due to a vulnerability in the wallet’s code, which allowed the attackers to bypass the authentication process and transfer the Bitcoins to their wallet. Despite developers’ attempts to recover the stolen funds, they were unsuccessful.

The hack led to the improvement of security measures and the creation of new ones that made it more challenging for attackers to access funds. Multi-signature wallets have become more securely and widely used by crypto enthusiasts to store their cryptocurrencies.

#11. Wintermute

In September 2022, Wintermute, a London-based market maker for digital assets, was the target of a significant cryptocurrency hack. The attacker exploited a flaw in the company’s hot wallet and stole $160 million worth of cryptocurrencies, including Bitcoin, Ethereum, and Ripple.

The incident forced Wintermute to suspend trading temporarily while they investigated the breach and assessed the damage. Fortunately, the hack didn't affect their client’s funds, but the impact on the industry was significant.

The Wintermute hack reminded companies within the cryptocurrency industry to stay vigilant and improve their security measures since the industry is growing rapidly and you have to keep up with it.

How to Protect Your Cryptocurrency

Protecting your cryptocurrency assets from digital attacks is crucial. Here are some effective measures to improve your security.

• Use a hardware wallet. A hardware wallet is a physical device that stores your private keys offline, making it difficult for hackers to access your digital assets.
• Enable two-factor authentication. This adds extra layers of security to your cryptocurrency accounts by requiring two forms of identification, such as a password and a code sent to your mobile phone.
• Keep your software up to date. Regularly updating your cryptocurrency software can help protect against known vulnerabilities and bugs.
• Use a strong, unique password. A strong and unique password for your cryptocurrency accounts can prevent unauthorized access.
• Avoid public Wi-Fi. Public Wi-Fi networks can be insecure, making it easier for hackers to intercept your data. It’s best to avoid using public Wi-Fi when accessing your cryptocurrency accounts.
• Be cautious of phishing scams. Beware of emails or websites that ask for personal information, such as login credentials or private keys. Always verify the authenticity of the website and the sender before providing sensitive information.
• Keep your private keys offline. Keeping your private keys offline, in cold storage, can protect them from hackers.

By following these best practices, you can reduce the risk of falling prey to cyber-attacks and ensure that your cryptocurrency assets remain secure.

Key Takeaways

As the cryptocurrency industry continues to grow, so do the security risks. These crypto hacks serve as a reminder of the importance of security measures and the need for investors to do their research and choose reputable exchanges and wallets.

Unfortunately, the crypto hacks we mentioned certainly aren’t the last. In recent years, several exchanges have been hacked, resulting in the loss of millions of dollars’ worth of cryptocurrencies.

These incidents can be devastating for investors and lead to a loss of trust in the entire cryptocurrency industry. That’s why it’s crucial to stay vigilant and take precautions to minimize any hacking risk. As the industry evolves, companies should prioritize security measures and work to prevent future attacks.