Many heists have happened during the history of digital currencies due to poor security practices by exchanges and financial institutions. Here is a quick summary of the top 10 in terms of value. In yu need to more understanding on blockchain, then please check: What is Blockchain?
Number 10: CRYPTSY $9.5 M
In early 2016, the Cryptsy exchange suffered an attack at which 13.00 BTC and 300,000 LTC were stolen, at a total value of $9.5 million. The breach occurred through the insertion of malware that allowed the cyber-criminal to reach sensitive information and transfer cryptocurrencies. Subsequently, Cryptsy declared bankruptcy due to firm insolvency.
Number 9: BITHUMB $31.5 M
In 2018, Bithumb, the famous Korean exchange and the sixth-largest exchange in the world, suffered a $31.5 million theft. The main consequences were the suspension of trading activities and the reduction of the prices of the leading cryptocurrencies.
The stolen millions were covered by Bithumb’s reserves, and all user assets were transferred to a safer “cold wallet”. Unlike Cryptsy, Bithumb has not declared bankruptcy.
Number 8: COINRAIL $40.0 M
Just a few weeks before the Bithumb attack, Coinrail, another Korean exchange, was robbed of about $40 million in cryptocurrencies. Hackers stole $19.5 million of NPXS tokens issued for the Pundi project, $13.8 million from Aston X, $5.8 million in tokens for ICO Dent, and over $1.1 million from Tron. In all cases, the companies that issued the coins were not hacked. The coins belonged to the users of Coinrail.
Number 7: VIRCUREX $50.0 M
In 2014, Vircurex announced the immediate halt of all withdrawal transactions due to a massive withdrawal of funds, which led to a total emptying of the exchange portfolio.
Emptying the boxes of Vircurex was a hacker attack. Subsequently Mark Karpeles, Vircurex’s CEO, filed for bankruptcy, acknowledging that many cryptocurrencies had disappeared and asking for protection from creditors.
Number 6: NICEHASH $60.0 M
In 2017, NiceHash, a service that allows users to sell and buy computing power to “mine” new Bitcoins, was the victim of a hacker attack. At least 4,736 Bitcoins disappeared, which is close to 60 million dollars. In 2018, NiceHash was able to put 60% of the stolen BTCs back on the market. The Slovenian company has promised to repay its customers fully and started doing so monthly.
Number 5: ZAIF $60.0 M
During 2019, Zaif announced that Bitcoin, Bitcoin Cash, and MonaCoin had been stolen through an attack, at a total value of about 6.7 billion Japanese yen: 59.67 million dollars. Of the 6.7 billion stolen yen, 2.2 billion yen (32%) were Zaif funds, while 4.5 billion yen were the funds reserved for customers.
Number 4: BITFINEX $72.0 M
Bitfinex, the largest crypto exchange in the world to accept dollar deposits, told the news agencies it had been robbed of 119,756 bitcoins, at a value of about 72 million dollars.
In August 2016, the exchange announced its intent to operate a real bail-in by withdrawing 36% of funds from user portfolios – even from those that had not been involved in the hacker attack.
At the same time, to settle the losses the exchange issued a payment token, the BFX – which could be exchanged on the trading platform or converted into shares of iFinex, the company that controls the system – crediting each user with a quantity corresponding the decrease in the assets of each wallet.
Almost a year later, Bitfinex declared that it had absorbed the consequences of the bitcoin theft entirely.
Number 3: BITGRAIL $195.0 M
Bitgrail has officially disappeared! On February 9 2018, the Italian exchange announced the “disappearance” of 17 million NANO. Bitgrail tried to reopen operations on May 2 by proposing to return the stolen funds through a specific plan. The plan consisted of the creation of another cryptocurrency called “Bitgrail Shares”, whose ownership would be attributed to users if they accepted the settlement agreement proposed by Firano, manager and creator of BitGrail.
The agreement provided a renunciation to return 80% of the NANO taken from the wallets and monthly repurchase by BitGrail of the BitGrail Shares at a fixed exchange rate with payment in BTC. The bankruptcy was sanctioned by a double sentence by the Court of Florence.
Number 2: The runner-up is MT.GOX – $460.0 M
This is the second-worst crypto hack of all times. Between 2013 and 2014, MT.GOX managed over 70% of all Bitcoin transactions in the world. On February 23 2014, the world awoke to Mt. Gox suspending operations, closing the site and declaring bankruptcy.
The official announcement on the next day reported a loss of 850,000 Bitcoins, of which 200,000 were later recovered. In this period BTC value dropped by 36%, and Mark Karpelès resigned from Mt.Gox Bitcoin Foundation’s board of directors.
Karpelès stated that technical problems had paved the way for fraudulent withdrawals. It has not yet been understood whether it was theft, fraud, bad management, or a combination of these.
Number 1: The winner (or actually the loser in this case) is COINCHECK – $534.8 M
This is the most significant crypto hack to date, and probably the biggest heist in history. Two hundred sixty thousand (260,000) investors were involved in the biggest cryptocurrency fraud ever after the hacking carried out against the company in 2018. The losses amounted to 46.3 billion yen, equal to 534.8 million dollars. In the afternoon of the attack the company decided to suspend trading, causing the NEM value to drop by around 20%.
At the end of a busy day, the top management of Coincheck said that they would not be able to repay customers, recognising leaks in the NEM cryptocurrency storage system. In an update the following Sunday, the Tokyo-based company announced that the refunds would be in Japanese currency and would be calculated based on the last quotations before the stop to the transactions, attributing a value of 88,549 yen for each of the vanished coins.
Although there is no complete information about each of these attacks, there is a common consensus that the reason was again, centralisation.
Hackers could get access to a central system, the exchange system here, and accordingly they were able to access customer wallets and cryptographic keys. That is why most of the crypto experts advise against leaving your cryptocurrencies at exchanges if you are not planning to trade them very soon. Instead, they recommend keeping your crypto assets in private wallets (either hardware or software wallets) to which you ONLY have access.
Remember what we said earlier about responsibility? These are your assets, and you should be responsible for keeping them safe and private. This separation of ownership and control is the main feature, and benefit, of decentralised systems.
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