The 5 biggest attacks on bitcoin exchanges
The decentralised Bitcoin network has no single point of failure, which is more than can be said for centralised Bitcoin exchanges. An overview of the five most devastating exchange hacks in bitcoin history.
1.Coincheck? Coins gone!
The Japanese exchange Coincheck suffered a momentous attack in early 2018. Hackers managed to siphon over 500 million units Crypto Comeback Pro of the cryptocurrency NEM from the exchange’s wallets. The damage amounted to over 450 million euros; 216,000 customers were affected. The exchange kept the customer funds in hot wallets instead of storing them offline. The company paid for the damage out of its own funds.
2.Mt.Gox: The biggest bitcoin theft ever
The Mt.Gox hack has long been the epitome of a disastrous bitcoin exchange hack. In 2014, the exchange – which was responsible for over 70 percent of BTC transactions at the time – was relieved of a horrendous 850,000 bitcoin. The equivalent value at the time: just under 400 million euros. Mt.Gox was originally an exchange platform for Magic-the-Gathering cards and was founded by Jed McCaleb, who, however, vacated his seat for Mark Karpelès and later took key positions at Ripple and finally at Stellar. Mt.Gox filed for bankruptcy after the incident.
3.Bitfinex hack: 120,000 bitcoin missing
Bitfinex also no longer has a clean slate when it comes to hacks. In a momentous attack on the trading platform, hackers captured a whopping 120,000 BTC in 2016. Bitfinex is still trying to regain possession of the coins. In August, the Bitcoin Exchange offered a reward of up to 400 million US dollars if it could get all the Bitcoins back. The offer is also directed at the perpetrators: the exchange promises to preserve their anonymity if they decide to return the 120,000 BTC. However, the hackers have so far shown little interest in the Bitcoin exchange’s advances.
4. bitgrail: small fry (NANO) also make crap
It was not Bitcoin but NANO that the masterminds behind the attack on the Italian crypto exchange Bitgrail captured. In February 2018, the perpetrators were able to extract NANO worth a total of 160 million euros from the exchange’s wallets. The exchange’s operators blamed the developers of Nano, saying a bug had led to the failure of their Nano Full Node and ultimately enabled the attack. Nano rejected the accusation. The competent Florence court ordered the permanent closure of the exchange in May 2018.
5 QuadrigaCX Inside Job Costs Customers 144 Million US Dollars
That centralised bitcoin exchanges offer a single point of failure does not only apply to outside attacks. Gerry Cotten, the now deceased CEO of the Canadian Bitcoin exchange QuadrigaCX, had apparently been playing fast and loose with customer money for years. Among other things, Cotten is said to have traded with his customers using fake accounts and falsified account balances. In the process, he also used „fake“ Bitcoin, i.e. BTC that only existed in the Excel spreadsheets of the now-defunct exchange. In this way, Cotten embezzled 22,488 Bitcoin, 429,966 Ether as well as Bitcoin Cash, BSV, Bitcoin Gold and Litecoin with an equivalent value of at least 144 million US dollars at the time.