Examining the Top 8 Crypto Exchange Hacks: What Traders Need to Know

Cryptocurrency is known for its transparency, but it also attracts cybercriminals. Despite exchanges investing in security measures, experienced attackers often find ways to breach these defenses. A single successful attack can compromise the assets of thousands of users. In 2023 alone, over $1.7 billion worth of cryptocurrencies were stolen, with the trend continuing into 2024. This article examines some of the biggest crypto exchange hacks, detailing how they occurred, their impact, and ways to protect oneself from such threats. Let’s take a closer look.

Sign up on BITFLEX today via our link and trade Bitcoin hassle-free. Seize this exclusive opportunity and redeem up to $68,888 in rewards. Act now and claim your reward!

Why Are Crypto Exchanges Susceptible to Hacking?

Crypto exchanges are prime targets for cybercriminals due to the high value of assets they hold. Unlike traditional banks, where assets are spread across multiple locations, crypto exchanges often store digital assets in a few locations, sometimes even in a single wallet. This concentration makes it easier for hackers to steal large amounts of cryptocurrency with a single breach.

Security standards also vary significantly among exchanges. Some newer or less reputable platforms may have vulnerabilities that are easy to exploit. Additionally, the irreversible nature of cryptocurrency transactions makes recovering stolen funds nearly impossible. Once a transaction is confirmed, it cannot be reversed, adding to the appeal for cybercriminals.

Check out: Top 5 Crypto Exchanges That have never Been Hacked

8 Biggest Crypto Exchange Hacks In History

Over the past decade, numerous cryptocurrency exchanges have been hacked. While some incidents caused minimal damage, others led to significant financial losses. Here are eight of the most notable crypto exchange hacks that continue to be discussed today

Mt. Gox

In February 2014, Mt. Gox, then the largest Bitcoin exchange, suffered a major hack. Approximately $460 million worth of Bitcoin, equivalent to 740,000 BTC, was stolen. Hackers gained control over the majority of the network’s validator nodes, allowing them to forge fake withdrawals and transfer bitcoins to their accounts.

The impact was devastating. Mt. Gox declared bankruptcy, and although 200,000 BTC were later recovered, 650,000 BTC remain missing. This incident not only led to the exchange’s collapse but also significantly eroded trust in cryptocurrency exchanges, serving as a stark warning to investors about the vulnerabilities in the crypto ecosystem. The Mt. Gox breach is arguably the most talked about crypto hacking incident in history.

Binance

On October 6, 2022, Binance experienced a major hack that resulted in the theft of approximately $570 million worth of Binance Coin (BNB). The attack targeted the Binance BNB Bridge, which enables asset transfers between different blockchains. The hacker exploited a vulnerability in the bridge’s smart contract, allowing them to create additional BNB tokens by bypassing security checks and inflating the supply without authorization.

The impact was significant. Trust in Binance was severely affected, and the price of BNB dropped considerably. Binance managed to freeze $7 million of the stolen funds by updating and freezing the hackers’ accounts. In response, the Binance team introduced a new on-chain governance mechanism to prevent future attacks.

FTX

On November 11, 2022, FTX, which is considered a top-tier cryptocurrency exchange, suffered a significant security breach, resulting in the theft of approximately $415 million worth of various cryptocurrencies, including Ethereum (ETH) and USD Coin (USDC). The hackers managed to infiltrate the system and transfer out hundreds of millions of dollars in crypto. This theft was discovered shortly after FTX filed for bankruptcy.

The hack had a profound impact, severely damaging trust in FTX and triggering a massive wave of withdrawals that crippled the exchange. In response, FTX worked with global regulators and law enforcement to trace the stolen funds. Despite the heavy losses, FTX managed to recover around $5.5 billion in assets.

Ronin Network

On March 29, 2022, the Ronin Network, supporting the popular blockchain game Axie Infinity, experienced one of the largest cryptocurrency thefts to date, with approximately $625 million worth of mainly Ethereum (ETH) and USD Coin (USDC) stolen. Hackers exploited weaknesses in the network’s validation processes, gaining control over the majority of its validator nodes. Ronin Network typically relies on a system with only nine validator nodes, five of which were compromised in this attack. Four are controlled directly by Sky Mavis, the parent company behind Axie Infinity, and one by a third-party provider. This breach allowed hackers to execute fake withdrawals.

The hack shook confidence in decentralized platforms. In response, Ronin Network and Sky Mavis bolstered security measures by increasing the number of validator nodes. Collaborating with authorities, they pursued efforts to trace stolen funds and explore recovery avenues. Plans for user reimbursement were put forward, funded by new capital injections and a dedicated reimbursement fund.

Bitmart

On December 5, 2021, Bitmart experienced a significant security breach resulting in the theft of approximately $196 million worth of various cryptocurrencies. The breach occurred due to a stolen private key, which granted hackers access to wallets on the platform, enabling them to carry out unauthorized transactions across multiple blockchains. This incident underscored vulnerabilities in wallet security and key management practices at the exchange.

The hack had severe repercussions, causing substantial financial losses and tarnishing Bitmart’s reputation as a secure trading platform. In response, Bitmart initiated a comprehensive reimbursement plan for affected users and implemented stricter security measures. These measures included the adoption of enhanced authentication protocols and intensified monitoring of the exchange’s wallet infrastructure to prevent future breaches and safeguard user assets.

Poly Network

On August 10, 2021, Poly Network suffered a massive hack resulting in the theft of approximately $610 million worth of various cryptocurrencies, including Ethereum and Polygon. The hack exploited vulnerabilities within Poly’s smart contracts, the code governing transactions on the platform. By manipulating a function within these contracts, hackers created a loophole that enabled them to transfer a substantial amount of cryptocurrency out of the network.

The audacious nature of this hack reverberated throughout the crypto industry. However, in an unexpected turn of events, the hacker returned all stolen funds over a two-week period. Poly Network acknowledged the hacker’s cooperation, recognizing it as instrumental in minimizing user losses and prompting discussions about security enhancements. This incident underscored the vulnerabilities inherent in smart contracts and emphasized the critical need for robust security audits to safeguard against similar breaches in the future.

Join BITFLEX using our link to trade Bitcoin and Ethereum right away. Take advantage of our exclusive offer and stand a chance to win up to $68,888 in rewards. Don't miss out!

Coincheck

On January 26, 2018, Coincheck, a leading Japanese digital currency exchange, fell victim to a major hack resulting in the theft of approximately $534 million worth of predominantly NEM (XEM) cryptocurrency. Unidentified hackers exploited vulnerabilities in Coincheck’s security system, gaining unauthorized access to a majority of the network’s validator nodes. This breach enabled them to execute fraudulent withdrawals, transferring the stolen NEM coins to their wallets.

The hack had significant repercussions for Coincheck, prompting a surge in withdrawals that destabilized the exchange. In response, Coincheck collaborated with law enforcement agencies to trace the stolen funds. Despite the substantial loss, Coincheck managed to reimburse its 260,000 customers using its capital. This incident underscored the importance of implementing enhanced security measures to safeguard against future breaches.

Wormhole Bridge

On February 2, 2022, the Wormhole Bridge, a widely-used platform connecting Ethereum and Solana blockchains, fell victim to a hack resulting in the theft of approximately $320 million worth of mainly Ethereum (ETH) and USD Coin (USDC) cryptocurrencies. Hackers exploited vulnerabilities in the bridge, allowing them to manipulate transactions and mint 120,000 “wrapped” Ethereum tokens for themselves.

The hack dealt a severe blow to trust in Wormhole, causing a notable decline in cryptocurrency prices. However, Wormhole assured users that all funds have been restored, services have resumed, and they are in the process of preparing a comprehensive incident report to address the breach and reassure their user base.

How to Protect Yourself Against Crypto Exchange Hacks

Protecting yourself from cryptocurrency exchange hacks is crucial. While much of the responsibility lies with the exchange itself, there are proactive steps you can take to mitigate the risks of hacking. Here are some essential tips:

Choose Reputable Exchanges

Opt for well-established and reputable cryptocurrency exchanges with a proven track record of security and reliability. Research user reviews and ratings to gauge the exchange’s reputation.

Enable Two-Factor Authentication (2FA)

Utilize two-factor authentication (2FA) on your exchange account to add an extra layer of security. This helps prevent unauthorized access even if your password is compromised.

Consider Hardware Wallets

Consider using hardware wallets, physical devices that store your cryptocurrency offline. This provides enhanced security compared to online wallets, as they are not susceptible to hacking attacks.

Beware of Phishing Scams

Remain vigilant against phishing scams, where attackers attempt to trick you into revealing sensitive information or login credentials. Always double-check URLs, emails, and messages before clicking on any links or providing personal information.

Monitor Account Activity

Regularly monitor your exchange account for any suspicious activity, such as unauthorized logins or transactions. Report any unusual activity to the exchange immediately and change your password.

Use Strong, Unique Passwords

Create strong, unique passwords for your exchange account, incorporating a combination of letters, numbers, and special characters. Avoid using the same password across multiple accounts to minimize the impact of a potential breach.

Final Takeaway

In reviewing some of the largest crypto exchange security breaches in history, it’s striking to see the breadth of these attacks. It’s clear that establishing robust security measures alone is insufficient to thwart experienced cybercriminals. Moreover, the scale of these attacks underscores the necessity for exchanges and other crypto firms to remain highly vigilant against unauthorized activities. Simultaneously, users must stay informed about these incidents and proactively implement measures to protect themselves against potential threats.

Maximize your Bitcoin trading potential with BITFLEX! Register through our link and redeem rewards of up to $68,888. Don’t let this exclusive offer slip away – claim your reward now!

DISCLAIMER: All content on CryptoKid.com is provided for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any product, service, or investment. The opinions expressed on CryptoKid.com do not constitute investment advice, and independent financial advice should be sought where appropriate. Trading is a highly risky activity that can lead to major losses; therefore, please consult your financial advisor before making any decision. CryptoKid.com will not be held liable for any of your personal trading or investing decisions. CryptoKid.com will not be held liable for any losses you may incur by speculating in the market.

Please view the full disclaimer at: CryptoKid.com/disclaimer