Hacks and scams combined have resulted in $7.6 billion worth of cryptocurrencies being stolen since 2011 according to a report published by Crystal Blockchain, the Amsterdam-based blockchain analytics firm.
U.S. crypto firms have suffered the most, having been hit 13 times, with China, South Korea, Japan, and the United Kingdom also heavily targeted.
Despite U.S. firms being the primary victims, Chinese firms have suffered the most in terms of stolen value. This is due in large part to the $2.9 billion stolen by the PlusToken Ponzi in 2019 and the $1 billion amassed earlier this year from the associated WoToken scam.
There have been over 100 attacks on crypto exchanges worldwide since 2011 which combined make up this astonishing figure.
Poor Security Measures to Blame
Crystal Blockchain’s report specifically identifies 23 memorable hacks and thefts that have occurred since 2011, with the report suggesting that low-level security of most platforms was the primary reason for the losses. The report went on to say that a lot of the firms have been lackadaisical regarding user verification which has made it relatively easy for hackers to carry out their crimes. Many of the crypto firms affected have merely had phone number or email verification in place, and very little in terms of multi-signature up until recently, which would have undoubtedly made the task harder for hackers.
That being said, the report concludes that even the best equipped exchanges with the highest security measure in place have sustained breaches, and the methods hackers are using are becoming more sophisticated/
More and more users worldwide are reliant on their mobile devices, which has become a huge problem for crypto security. SIM-swapping has increased drastically, affecting users of all major mobile networks. Mobile operators seem incapable of stopping their employees from conspiring with hackers, be it through negligence of malfeasance.
Crystal Blockchain Product Director Kyrylo Chykhradze cited the rise of SIM-swapping as one of the key factors in the rise of crypto crimes:
“What has changed and developed is the way that these criminals are laundering stolen funds. These entities scrutinize services to understand their [anti-money laundering/know your customer] policies as well as policies related to privacy coins in the service’s offering,” he said.
“Services with lower barriers for KYC or privacy coin entry are better opportunities for laundering. This is another critical point to consider in crypto service security, how do we make stolen fund laundering almost impossible for bad actors?”
The number of attacks and the sophistication of the hackers perpetrating them is sure to increase as the value of crypto assets such as bitcoin grows.