2017-More Than $200m in Cryptocurrency Stolen, Hacked or Locked Up

July 2017- The Parity Hack

The second largest hack in the history of the Ethereum network occurred in July 2017. By exploiting a vulnerability in the Parity Multisig wallet, the hacker was able to syphon more than 150,000 Ether from a handful of multi-signature contracts, which was worth approximately $30 million. As the name suggests, a multisig contract requires number of signatures (private/public keys) to be confirmed simultaneously for transactions to occur and value to be transferred. However the hacker circumvented this by sending two transactions to the contract:

  1. The first allowed them to take individual control over the contract (disabling the need for multiple key signatures).
  2. The second to move the assets to their personal address.

November 2017- Tether Loses $30m to Hackers

Tether is a crypto-asset designed to allow users to trade crypto-tokens that are backed by FIAT currency, and is pegged to the USD at the rate of 1:1. In November 2017, a post on Tether’s website detailed that “malicious action by an external attacker” led to the theft of almost $31 million.

Cold Storage- The Ultimate Solution to Cyber Attacks

Although these reported hacks occurred on a large scale, it is important to note that with proper storage all of the funds lost could have been prevented. Not to mention these all occurred in our very recent history! We’ve highlighted the differences between hot and cold wallets before, however it needs to be said that hot wallet storage is literally an invitation for potential cyber-crime.

  • Stolen usernames and password resets, granted by gaining access to your email accounts.
  • Access gained to your private keys. This can be through physical theft of devices, or unwanted access via your email, phishing scams and/or viruses, which locate them if stored on an online device.
  • Poor security provided by third parties, (as with the NiceHash Hack mentioned above).
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