Having a look at some of the biggest scam and hack in the cryptocurrency space.
As the world experiences a spike in the cryptocurrency popularity in the year 2017 when Bitcoin reached its all-time high of almost $20,000, this event attracted the hackers from all around the world to take an advantage of the people’s unwavering and unimaginable willingness to invest in the cryptocurrency world. The blockchain technology has a lot of potentials and as the saying goes “With more power comes more responsibility”. The Blockchain Technology and its application in the cryptocurrency space undoubtedly had responsibilities of saving the interest of its investors but there was a lot of incidences which proved a disastrous failure of their responsibilities. There were a lot of hack and spam in the crypto space.
As discussed in the previous article regarding the bottlenecks of the cryptocurrency exchanges the hackers are just waiting to take an advantage out of it. With a lot of loopholes and pitfalls in the cryptocurrency exchanges, it is no wonder that a number of hacks have occurred on some of the largest centralized cryptocurrency exchanges around the world. Also, a number of scams have been initiated in the name of various cryptocurrency schemes.
1. Coincheck hack. $530 million
In January 2018 the Japan-based cryptocurrency exchange, Coincheck reported that the hackers had stolen almost $530 million from its users. This is currently ranked as the biggest hack in the cryptocurrency world.
2. Mt. Gox Hack. $473 million in BTC.
In March 2014, one of the biggest black day in the cryptocurrency space was the hack of the cryptocurrency exchange, Mt. Gox which resulted in the loss of almost $473 million in Bitcoin. The cryptocurrency exchange had to file for a bankruptcy the following year due to this.
3. August 2016: Bitfinex Hack $72 million in BTC.
Catastrophic Summer of 2016 loomed over the cryptocurrency space as another cryptocurrency exchange Bitfinex was hacked. They managed to take up almost $72 million in Bitcoin. It was investigated that the hackers effectively exploited the usage of the multi-signature wallets that the cryptocurrency exchange provided.
4. July 2017: Parity Hack. $32 million in Ether.
The hackers found a vulnerability in the parity multisignature wallets. The multi-signature wallet had access to the funds raised from the initial coin offerings of Casino, Aeternity Blockchain, Swarm City, and Edgeless. The malicious hackers make almost $32 million in Ether.
5. Bitcoin Savings and Trust. 500,000 BTC loss.
Pirateat40 was a cryptocurrency Ponzi scheme operated by a man from Texas. The scheme was valued at around 4.5 million at that point in time. The scheme could not pay back to its investors as it had lost almost 500,000 BTC. Later the SEC had to intervene to solve the issue.
6. MyBitcoin theft. 79,000 BTC theft.
This particular scheme was run by Tom Williams as a scam and hence this can’t be regarded as a theft. Both in terms of dollars as well as Bitcoins it was a huge loss. This scam resulted in the loss of almost 79,000 BTC.
7. Silk road scam. 20,000 Bitcoin loss.
“The great 420 scam”, was the nickname given to all the events related to this particular drug dealing site. The scam was about, bypassing the site’s escrow account and accessing one of the accounts of the dealer named “Tony76”. In less than a duration of two weeks almost 20,000 Bitcoin where lost.
8. The BDT fiasco. 10,000 BTC loss.
Expected to be a better version of Bitcoinica, we are referring to Bitdaytrade which seemed like a legitimate website. Alberto Armandi manages to mastermind the whole plot by initiating a bond sale and disappear. This left the website owners bankrupt. Later, revelations were made that this was not actually a hack which resulted in the loss of almost 10,000 Bitcoins.
The cryptocurrency space currently is not interfered by the government which makes no one responsible for the cryptocurrency hacks and scams that happen. Hence many people are not hopping on to the cryptocurrency bandwagon due to no intervention of the government.
Also, all the cryptocurrency scams and hacks are a result of the negligence of the investors as well. The investors should make an effective research on any Initial Coin Offering, project, any scheme or company that they are looking forward to investing in. Another main reason that can be quoted for these hacks was the illiteracy of the people of the crypto space at that instance of time.