Cryptocurrency has become a popular and lucrative form of investment, but it also comes with major security risks. As the crypto market grows, so do the number of hackers, scammers, and fraudsters who want to steal your hard-earned coins. In this guide, we will look at some of the biggest crypto crimes of all times, and share some tips on how to protect your cryptocurrency from theft and loss.
Top 5 Biggest Crypto Crimes of All Times
You may not be familiar with the jaw-dropping news regarding crimes in the crypto world, but they are more than real and those criminals manage to steal millions. Unfortunately, there are plenty of examples, but we are going to take a look at the top 5.
- Mt. Gox: Over $8.8 Billion. Mt. Gox was once the largest Bitcoin exchange in the world, until it collapsed in 2014 after losing 850,000 bitcoins, worth over $450 million at the time, to a massive hack. The exchange’s former CEO, Mark Karpeles, was later arrested and convicted of fraud and embezzlement. The creditors of Mt. Gox are still waiting to receive their share of the remaining bitcoins, which are now worth over $8.8 billion1.
- Coincheck: Over $534 Million. Coincheck was a Japanese cryptocurrency exchange that suffered a devastating hack in 2018, when hackers stole more than 500 million NEM coins, worth over $534 million at the time. It was one of the biggest hacks in crypto history, and raised security questions around the use of hot wallets (online wallets that are connected to the internet) and the lack of regulation in the crypto industry2.
- OneCoin: Over $4 Billion. OneCoin was a notorious Ponzi scheme that claimed to be a revolutionary cryptocurrency, but in reality was a fraudulent operation that lured investors with false promises of high returns. OneCoin was founded by a Bulgarian woman named Ruja Ignatova, who disappeared in 2017 with over $4 billion of investors’ money. OneCoin was exposed as a scam by various authorities and media outlets, and several of its leaders were arrested and charged with money laundering, fraud, and conspiracy3.
- Bitfinex: Over $72 Million. Bitfinex is a Hong Kong-based cryptocurrency exchange that was hacked in 2016, when hackers stole 120,000 bitcoins, worth over $72 million at the time. The exchange managed to recover some of the stolen funds, and issued a new token called BFX to compensate the affected users. The token was later redeemed at a 1:1 ratio with USD, and the exchange claimed to have repaid all the losses4.
- QuadrigaCX: Over $190 Million. QuadrigaCX was a Canadian cryptocurrency exchange that collapsed in 2019, after its founder and CEO, Gerald Cotten, died unexpectedly in India. Cotten was the only person who had access to the exchange’s cold wallets (offline wallets that are not connected to the internet), where most of the funds were stored. As a result, over 115,000 users lost access to their crypto assets, worth over $190 million. The exchange filed for bankruptcy, and an investigation revealed that Cotten had mismanaged and embezzled the funds, and that some of the cold wallets were empty5.
How to Avoid Being Hacked or Scammed
As you can see, crypto crimes can happen to anyone, and they can have devastating consequences. Therefore, it is essential to take some precautions to safeguard your cryptocurrency from hackers and scammers. Here are some tips on how to do that:
- Keep your money closer. Storing money at an exchange is never a smart idea, as exchanges are often the target of hackers. Exchanges are where deals are taking place, and not where the assets should be stored. Although we observe some efforts to improve the security of the cryptocurrency exchanges, we strongly recommend to use them for making deals only, and transfer your funds to a more secure wallet as soon as possible.
- Use a cold wallet. To keep your coins even closer, especially if you own a significant amount of them, try to avoid storing them on devices that are connected to the internet, such as your phone or computer. Use a cold wallet instead, such as a hardware wallet or a paper wallet, as they are not so vulnerable to attack because they are offline. Keeping small amounts of digital currency in hot wallets, for example, for purchasing items online, is fine, but don’t store your life savings there.
- Use complex passwords and multi-factor authentication. Secure passwords are always your first defense against cybercriminals that are up to no good. As you create login credentials for your crypto wallet or exchange account, choose a password with a variety of letters, numbers, and symbols. The longer, the better. Use a password manager to generate and store your passwords securely, and never reuse the same password across multiple sites. Additionally, enable multi-factor authentication (MFA) whenever possible, as it adds an extra layer of security by requiring a code or a device confirmation to access your account.
- Beware of phishing scams. Phishing is a common technique used by scammers to trick you into revealing your personal information, such as your password, private key, or recovery phrase, by sending you fake emails, messages, or links that look like they are from legitimate sources. Never click on random links or attachments related to crypto, and always verify the sender’s identity and the URL’s authenticity before entering any information. Remember, no reputable crypto service will ever ask you for your private key or recovery phrase, as they are meant to be known only by you.
- Keep your devices safe. Make sure your devices are protected from malware, viruses, and other threats that could compromise your crypto security. Use a reputable antivirus software and keep it updated regularly. Avoid using public Wi-Fi or computers to access your crypto accounts, as they could be monitored or infected by hackers. Encrypt your devices and back up your data regularly, in case you lose them or they get damaged.
- Keep your crypto holdings private. Don’t brag about how much cryptocurrency you own, or share your wallet address or transaction details publicly, as this could attract unwanted attention from hackers or thieves. Be careful about who you trust with your crypto information, and avoid joining shady or unknown groups or platforms that promise unrealistic returns or rewards. If something sounds too good to be true, it probably is.
Conclusion
Cryptocurrency is an exciting and innovative form of investment, but it also comes with major security risks. By following the tips in this guide, you can reduce the chances of becoming a victim of crypto crimes and scams, and enjoy the benefits of the crypto world safely and securely.
