History of Hack
In this last lesson, we will look at some of the most prevalent sorts of crypto-space attacks against individuals, as well as some recent examples of successful attacks on platforms and projects. We will also explore how these assaults could have been avoided and propose best practices for individuals to follow in the future to protect themselves from similar attacks. Individuals can considerably lower their chance of falling victim to these types of attacks by learning the strategies used by attackers and taking proactive efforts to secure their assets and personal information. Whether you are a seasoned crypto user or just starting out, it is critical to keep informed and aware of the risks and best practices for crypto security.
Attacks to Individuals
Type : Phishing Scams
Phishing scams are one of the most popular sorts of attacks on individuals in the crypto realm. Attackers send false emails or messages that appear to be from a reputable source, such as a cryptocurrency exchange or wallet provider, in an attempt to fool the receiver into disclosing their login credentials or transferring funds to the attacker’s wallet.
How it May Be Avoided
One approach to avoid phishing scams is to always confirm the validity of emails or texts before acting. This can be accomplished by confirming the sender’s email address or by contacting the company directly to confirm the message’s veracity. Users should also avoid clicking on links or downloading attachments from unfamiliar or suspect sources, since these may include malware or other dangerous programs.
Type: SIM swapping
SIM swapping is another prevalent attack on folks in the crypto area. Attackers use deception to persuade a cell carrier to transfer a victim’s phone number to a device controlled by the attacker, allowing them to intercept SMS-based two-factor authentication tokens and obtain access to the victim’s cryptocurrency wallets.
How it May Be Avoided
Users can prevent SIM swapping attacks by setting up a PIN or password with their mobile carrier, utilizing a physical hardware wallet to hold their bitcoin, and using authenticator applications or other kinds of two-factor authentication that do not rely on SMS-based codes.
Type: Social Engineering
Social engineering assaults entail attackers deceiving and manipulating victims into disclosing sensitive information or undertaking acts that are harmful to their security. Social engineering attacks in the cryptocurrency arena may involve attackers impersonating a trusted contact or using fraudulent employment offers or investment opportunities to get access to a victim’s bitcoin.
How it May Be Avoided
Users should always be wary of unsolicited messages or requests for sensitive information, and they should never give their private keys or seed phrases to anybody. Furthermore, users should verify the identity of anyone requesting access to their cryptocurrency or personal information, and they should study investment options or job opportunities through reliable sources.
Attacks to Companies/Protocols
Mt. Gox : The Rise and Fall of Bitcoin’s Biggest Exchange
In 2014, Mt. Gox, once the world’s largest Bitcoin exchange, filed for bankruptcy after losing approximately 850,000 Bitcoins, worth around $450 million at the time. The company attributed the loss to a long-term hacking effort that had been taking place for several years.
How it Could Have Been Prevented
One of the main reasons why the Mt. Gox hack was so successful was that the company did not have proper security measures in place. For example, the company stored its Bitcoins in a hot wallet, which is connected to the internet and is therefore more susceptible to hacking attempts. If the company had stored its Bitcoins in a cold wallet, which is disconnected from the internet, the hack may not have been successful. Additionally, the company did not perform regular security audits or update its software, making it vulnerable to known vulnerabilities in the Bitcoin software. Had the company kept its software up-to-date and regularly tested its security measures, it may have been able to detect and prevent the attack before it resulted in such a massive loss.
Bitfinex Hack : multi-signature wallet vulnerability leads to $72M Bitcoin theft
In 2016, Bitfinex, one of the world’s largest cryptocurrency exchanges, lost approximately $72 million worth of Bitcoin as a result of a hack. The attackers exploited a vulnerability in the company’s multi-signature wallet software, which allowed them to steal Bitcoin stored in the wallet.
How it Could Have Been Prevented
One of the main reasons why the Bitfinex hack was successful was that the company relied too heavily on its multi-signature wallet software. While multi-signature wallets can be more secure than other types of wallets, they are not immune to attacks. If the company had implemented other security measures, such as storing its Bitcoins in a cold wallet or using a combination of hot and cold wallets, it may have been able to prevent the attack.
The DAO Security Breach : $50M Worth of Ethereum Stolen in 2016
In 2016, a decentralized autonomous organization (DAO) called The DAO, which was built on the Ethereum blockchain, was hacked. The attackers exploited a vulnerability in the DAO’s smart contract code, which allowed them to steal approximately $50 million worth of Ethereum.
How it Could Have Been Prevented
One of the main reasons why the DAO hack was successful was that the smart contract code was not properly audited before it was deployed. If the DAO had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers. The Ethereum blockchain was not designed to handle smart contract vulnerabilities, which made it difficult to recover the stolen funds. If the Ethereum developers had built a mechanism for recovering stolen funds in the event of a hack, the loss may not have been as severe.
Poly Network : Cross-Chain Protocol Hacked for $600M
In August 2021, Poly Network, a cross-chain interoperability protocol, was hacked for over $600 million worth of cryptocurrency, including Ethereum, Binance Smart Chain, and Polygon. The hackers exploited a vulnerability in the protocol’s smart contract, allowing them to transfer the funds to their own wallets.
How it Could Have Been Prevented
One of the main reasons why the Poly Network hack was successful was that the smart contract code was not properly audited before it was deployed. If the company had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers. Additionally, the company did not have proper security measures in place to detect and prevent the attack. If the company had implemented other security measures, such as monitoring for unusual transactions or using multi-signature wallets, it may have been able to prevent the attack before it resulted in such a massive loss.
BAYC suffers major hack, Ether worth $750k stolen
In November 2021, the Bored Ape Yacht Club ( BAYC ) , a popular NFT project, was hacked for over $750,000 worth of Ether. The attackers exploited a vulnerability on the project’s website, which allowed them to access the private keys of the project’s wallet.
How it Could Have Been Prevented
One of the main reasons why the Bored Ape Yacht Club hack was successful was that the project did not have proper security measures in place to protect its private keys. If the project had stored its private keys in a secure offline wallet, the hack may not have been successful.
Cream Finance : Smart Contract Exploit Leads to $25 Million Hack
In September 2021, Cream Finance, a decentralized finance (DeFi) lending protocol, was hacked for over $25 million worth of cryptocurrency. The hackers exploited a vulnerability in the protocol’s smart contract code, allowing them to transfer the funds to their own wallets.
How it Could Have Been Prevented
One of the main reasons why the Cream Finance hack was successful was that the smart contract code was not properly audited before it was deployed. If the company had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers.
Conclusion
In conclusion, the various examples of hacks and scams discussed in this lesson serve as a cautionary tale for individuals and companies in the crypto space. It is essential to learn from these attacks and take proactive measures to secure assets and personal information.
Best practices as seen in Lesson 2 - Social engineering attack, such as confirming the validity of emails or texts, utilizing a hardware wallet, and regularly auditing software, can significantly lower the risk of falling victim to attacks.
Companies should prioritize security measures, such as storing funds in a cold wallet, performing regular security audits, and properly auditing smart contract codes before deployment. Staying informed and aware of the risks and best practices for crypto security is critical for both seasoned and new users of cryptocurrencies.
In addition to the specific examples of hacks and scams discussed, it is important for individuals to be aware of some general risks and challenges in the crypto space. The decentralized and often anonymous nature of cryptocurrencies can make it easier for bad actors to take advantage of unsuspecting individuals. Additionally, the highly volatile nature of crypto markets means that individuals must be prepared for the possibility of significant losses. It is important to approach crypto with caution and to thoroughly research any projects or investments before getting involved.
Further Read
If you are approaching the cryptocurrency world for the first time, we suggest you check our other course Crypto Investing : a course is for people who want to learn how to invest in cryptocurrency, including how to research and evaluate different projects, how to diversify a crypto portfolio, and how to manage risk
History of Hack
In this last lesson, we will look at some of the most prevalent sorts of crypto-space attacks against individuals, as well as some recent examples of successful attacks on platforms and projects. We will also explore how these assaults could have been avoided and propose best practices for individuals to follow in the future to protect themselves from similar attacks. Individuals can considerably lower their chance of falling victim to these types of attacks by learning the strategies used by attackers and taking proactive efforts to secure their assets and personal information. Whether you are a seasoned crypto user or just starting out, it is critical to keep informed and aware of the risks and best practices for crypto security.
Attacks to Individuals
Type : Phishing Scams
Phishing scams are one of the most popular sorts of attacks on individuals in the crypto realm. Attackers send false emails or messages that appear to be from a reputable source, such as a cryptocurrency exchange or wallet provider, in an attempt to fool the receiver into disclosing their login credentials or transferring funds to the attacker’s wallet.
How it May Be Avoided
One approach to avoid phishing scams is to always confirm the validity of emails or texts before acting. This can be accomplished by confirming the sender’s email address or by contacting the company directly to confirm the message’s veracity. Users should also avoid clicking on links or downloading attachments from unfamiliar or suspect sources, since these may include malware or other dangerous programs.
Type: SIM swapping
SIM swapping is another prevalent attack on folks in the crypto area. Attackers use deception to persuade a cell carrier to transfer a victim’s phone number to a device controlled by the attacker, allowing them to intercept SMS-based two-factor authentication tokens and obtain access to the victim’s cryptocurrency wallets.
How it May Be Avoided
Users can prevent SIM swapping attacks by setting up a PIN or password with their mobile carrier, utilizing a physical hardware wallet to hold their bitcoin, and using authenticator applications or other kinds of two-factor authentication that do not rely on SMS-based codes.
Type: Social Engineering
Social engineering assaults entail attackers deceiving and manipulating victims into disclosing sensitive information or undertaking acts that are harmful to their security. Social engineering attacks in the cryptocurrency arena may involve attackers impersonating a trusted contact or using fraudulent employment offers or investment opportunities to get access to a victim’s bitcoin.
How it May Be Avoided
Users should always be wary of unsolicited messages or requests for sensitive information, and they should never give their private keys or seed phrases to anybody. Furthermore, users should verify the identity of anyone requesting access to their cryptocurrency or personal information, and they should study investment options or job opportunities through reliable sources.
Attacks to Companies/Protocols
Mt. Gox : The Rise and Fall of Bitcoin’s Biggest Exchange
In 2014, Mt. Gox, once the world’s largest Bitcoin exchange, filed for bankruptcy after losing approximately 850,000 Bitcoins, worth around $450 million at the time. The company attributed the loss to a long-term hacking effort that had been taking place for several years.
How it Could Have Been Prevented
One of the main reasons why the Mt. Gox hack was so successful was that the company did not have proper security measures in place. For example, the company stored its Bitcoins in a hot wallet, which is connected to the internet and is therefore more susceptible to hacking attempts. If the company had stored its Bitcoins in a cold wallet, which is disconnected from the internet, the hack may not have been successful. Additionally, the company did not perform regular security audits or update its software, making it vulnerable to known vulnerabilities in the Bitcoin software. Had the company kept its software up-to-date and regularly tested its security measures, it may have been able to detect and prevent the attack before it resulted in such a massive loss.
Bitfinex Hack : multi-signature wallet vulnerability leads to $72M Bitcoin theft
In 2016, Bitfinex, one of the world’s largest cryptocurrency exchanges, lost approximately $72 million worth of Bitcoin as a result of a hack. The attackers exploited a vulnerability in the company’s multi-signature wallet software, which allowed them to steal Bitcoin stored in the wallet.
How it Could Have Been Prevented
One of the main reasons why the Bitfinex hack was successful was that the company relied too heavily on its multi-signature wallet software. While multi-signature wallets can be more secure than other types of wallets, they are not immune to attacks. If the company had implemented other security measures, such as storing its Bitcoins in a cold wallet or using a combination of hot and cold wallets, it may have been able to prevent the attack.
The DAO Security Breach : $50M Worth of Ethereum Stolen in 2016
In 2016, a decentralized autonomous organization (DAO) called The DAO, which was built on the Ethereum blockchain, was hacked. The attackers exploited a vulnerability in the DAO’s smart contract code, which allowed them to steal approximately $50 million worth of Ethereum.
How it Could Have Been Prevented
One of the main reasons why the DAO hack was successful was that the smart contract code was not properly audited before it was deployed. If the DAO had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers. The Ethereum blockchain was not designed to handle smart contract vulnerabilities, which made it difficult to recover the stolen funds. If the Ethereum developers had built a mechanism for recovering stolen funds in the event of a hack, the loss may not have been as severe.
Poly Network : Cross-Chain Protocol Hacked for $600M
In August 2021, Poly Network, a cross-chain interoperability protocol, was hacked for over $600 million worth of cryptocurrency, including Ethereum, Binance Smart Chain, and Polygon. The hackers exploited a vulnerability in the protocol’s smart contract, allowing them to transfer the funds to their own wallets.
How it Could Have Been Prevented
One of the main reasons why the Poly Network hack was successful was that the smart contract code was not properly audited before it was deployed. If the company had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers. Additionally, the company did not have proper security measures in place to detect and prevent the attack. If the company had implemented other security measures, such as monitoring for unusual transactions or using multi-signature wallets, it may have been able to prevent the attack before it resulted in such a massive loss.
BAYC suffers major hack, Ether worth $750k stolen
In November 2021, the Bored Ape Yacht Club ( BAYC ) , a popular NFT project, was hacked for over $750,000 worth of Ether. The attackers exploited a vulnerability on the project’s website, which allowed them to access the private keys of the project’s wallet.
How it Could Have Been Prevented
One of the main reasons why the Bored Ape Yacht Club hack was successful was that the project did not have proper security measures in place to protect its private keys. If the project had stored its private keys in a secure offline wallet, the hack may not have been successful.
Cream Finance : Smart Contract Exploit Leads to $25 Million Hack
In September 2021, Cream Finance, a decentralized finance (DeFi) lending protocol, was hacked for over $25 million worth of cryptocurrency. The hackers exploited a vulnerability in the protocol’s smart contract code, allowing them to transfer the funds to their own wallets.
How it Could Have Been Prevented
One of the main reasons why the Cream Finance hack was successful was that the smart contract code was not properly audited before it was deployed. If the company had performed a thorough audit of its smart contract code, it may have been able to detect and fix the vulnerability before it was exploited by attackers.
Conclusion
In conclusion, the various examples of hacks and scams discussed in this lesson serve as a cautionary tale for individuals and companies in the crypto space. It is essential to learn from these attacks and take proactive measures to secure assets and personal information.
Best practices as seen in Lesson 2 - Social engineering attack, such as confirming the validity of emails or texts, utilizing a hardware wallet, and regularly auditing software, can significantly lower the risk of falling victim to attacks.
Companies should prioritize security measures, such as storing funds in a cold wallet, performing regular security audits, and properly auditing smart contract codes before deployment. Staying informed and aware of the risks and best practices for crypto security is critical for both seasoned and new users of cryptocurrencies.
In addition to the specific examples of hacks and scams discussed, it is important for individuals to be aware of some general risks and challenges in the crypto space. The decentralized and often anonymous nature of cryptocurrencies can make it easier for bad actors to take advantage of unsuspecting individuals. Additionally, the highly volatile nature of crypto markets means that individuals must be prepared for the possibility of significant losses. It is important to approach crypto with caution and to thoroughly research any projects or investments before getting involved.
Further Read
If you are approaching the cryptocurrency world for the first time, we suggest you check our other course Crypto Investing : a course is for people who want to learn how to invest in cryptocurrency, including how to research and evaluate different projects, how to diversify a crypto portfolio, and how to manage risk