How Popular Crypto Exchanges Are Learning to Deal with Cyberattacks

 

Blockchain has revolutionized the way we look at monetary transactions and banking, however the 9 year existence of cryptocurrency has been peppered with some monumental hacks.

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Blockchain technology will always push the envelope when battling against such cyber-attacks while the space is constantly evolving. Unfortunately, the criminal empire will always evolve alongside these changes.

Let’s take a look at some of the biggest exchanges over the past 9 years.

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Mt. Gox Exchange

Mt. Gox, one of the most notorious incidences since bitcoin’s inception, which has set the bar very high in terms of its effect it had within the cryptocurrency community.

The incident claimed over 850,000 Bitcoin, which made headlines over the last 4  years and has been a major talking point during this time. At the height of its popularity, in 2013, Mt. Gox was the largest exchange in the world, responsible for over 80% of all Bitcoin transactions.

This resulted in $473 million worth of Bitcoin stolen. The details surrounding the hack are still not clear; however a large number of people were arrested for the involvement with these stolen funds.

Take note that it’s hard to refer to Mt. Gox as a pure cyber hack, as the CEO Mark Karpeles was indeed charged with embezzlement of these Bitcoin funds for his involvement in this case, not to mention various associates of his which were also involved.

Coincheck Exchange

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Fast forward to 2018, where this most recent hack, which was unfortunately titled as the largest cryptocurrency hack in modern history, with regard to value, was stolen by hackers.

It’s not entirely clear how this happened, however the hacker gained access to private keys of Coinchecks online wallet and moved approximately $523 million worth of NEM coins.

The exchange was condemned for its horrible security standards. Those within the cryptocurrency community could not believe that all these funds were stolen from a single wallet address.

Nonetheless, the exchange worked diligently to reduce the damage done by eradicating the transactions, in an attempt to undo the damage as well as manage to create a tagging system that allowed them to track these stolen NEM coins.

Since these stolen coins were flagged, the hackers were not able to sell or convert these coins on different exchanges. In an attempt to make good with their customers, Coincheck vowed to commence repaying users for these lost funds.

Binance Exchange

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Known as one of the largest cryptocurrency exchanges by volume, Binance is the most recent exchange to be hit by an attempted cyber-attack.

Unlike some of the other hacks that occurred in the past, Binance was completely perplexed by a far more sophisticated operation. With that said, the exchanges security systems picked up on the suspicious activity and the hackers were not able to make off with any of the stolen cryptocurrency.

On March 7, numerous users complained to Reddit and other social media outlets that the unauthorized transactions were taken out of their accounts.

According to Binance members, those hackers used phishing  websites to hijack user logins. Once they acquired enough user login accounts, they created trading API keys within the stolen accounts.

On March 7, the cyber hackers utilized these keys to place buy orders on the VIA/BTC market, which pumped the price to an all-time high. These coins had been moved to 31 different accounts, sold at the highest price, and then moved back into the corresponding BTC accounts.

Bitgrail Exchange

The Italian based exchange, Bitgrail, lost 17 million dollars worth of Nano tokens, estimated at around $187 million. The founder of Bitgrail, Francesco Firano blames the Nano development team and its blockchain technology, while the Nano team refuted those claims, thus blaming the founder Francesco Firano.

Since the inception of this news, Bitgrail has announced that these funds will be returned to their users, however the users of this exchange have to sign an agreement that rules out any future legal action against the Italian exchange.

Nicehash Mining Service

This mining service had over 4000 bitcoin stolen, worth around $63 million at that time, by hackers who had allegedly hacked the company’s wallet.

The popular service did very well to recover after the attack, by displacing the current CEO. After several weeks, they resumed their service and pledged to refund all users affected by the cyber-attack, which started back in February 2018

Cryptocurrency Exchanges – Our Current Predicament

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We have certainly come a long way since the Mt. Gox debacle. We’re still in dealing with the effects and aftermath of the infamous incident, however last weeks news was announced that Mt. Gox trustees had been liquidating large amounts of Bitcoin to reimburse creditors.

If that wasn’t bad enough, the sales of these funds were in excess of 400 million dollars and is currently being blamed for the markets lows in early 2018.

The FBI continues to investigate, focusing on a UK-based company that is believed to have laundered 650,000 Bitcoin.

Fortunately those responsible for the Coincheck and Binance hacks have been far more proactive, which is a good sign for newer exchanges which tend to take measures regarding the stoppage of these cyber-attacks as well as the return of funds to their customers.

Binance has promised will award anyone with information that would lead to the arrest of the cyber hackers responsible for the attack, who would be awarded $250,000 worth of Binance Coin  bounty for the offer.

These two exchanges have given users a bit more confidence with regard to cyber tax as a whole. They’ve gone to great lengths to ensure that the affected community is reimbursed as quickly as possible.

Bitgrail has come under heavy scrutiny from the cryptocurrency community due to the fact that the CEO of the company had never admitted full responsibility for the theft, unlike Binance and Coincheck which immediately announced future plans to refund all customers that were affected by the attack, most of which have been refunded.

Taking all these previous scenarios into account, it seems that these cryptocurrency exchanges are reacting to future cyber-attacks in a more proactive manner, however this is completely dependent upon the ethics and credibility of the CEOs of said companies and their respective management teams.

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