Anyone venturing into the digital currency scene understands the significance of performing analyses to evaluate potential gains. Security breaches and hacking are a constant risk when it comes to the realm of cryptocurrencies.
Nevertheless, the level of security and protection offered by the trading platform chosen is often overlooked. Consequently, this oversight has so far resulted in a loss of approximately $4.26 billion. Whenever scammers or hackers are successful in their fraudulent practices, this results in an average loss of $43 million.
2 Notorious Cases where Security Failed
Reputability and popularity do not guarantee protection from malicious behaviour. To fully understand the gravity of fraudulent activity and security breaches, one must keep in mind some of the most infamous security failures in recent history.
Loss: 120,000BTC or $72 million in assets (2016)
Considered as one of the most prominent cryptocurrency exchanges globally with about two million users, Bitfinex sees billions of dollars’ worth of transactions daily. This successful exchange fell victim to a major hack back in 2016, having the amount of 120,000BTC stolen, which was equivalent to $72 million. In today’s prices, that would be a much higher figure. Bitfinex used to offer multi-signature wallets through BitGo, a feature created to enhance user security. However, 12 months after this component was introduced, the hack occurred.
The question was raised: what made Bitfinex susceptible to this fate? The way its accounts were structured was the first step towards security failure – to withdraw a large amount of funds, BitGo would likely have had to sign off transactions.
The hack caused Bitcoin’s market value to drop by a staggering 20%.
Loss: 7,000BTC or $40 million in assets (2019)
Binance is widely believed to be the world’s largest crypto exchange, based on trading volumes. Despite this, the exchange was not able to…