More than US$11 billion has been stolen from supposedly secure crypto exchanges, wallets and mining platforms since 2011, mostly due to hacking incidents, research from Inside Bitcoins has revealed.
For a form of currency that bases itself on safety and security, $11 billion is a pretty significant number. Stored on blockchain technology and protected by encryption keys, cryptocurrencies are supposed to be impossible to counterfeit or copy.
In fact, the currency is so secure that when the co-founder and chief of Canadian exchange QuadringaCX Gerald Cotten died last year, it transpired he was the only one with the digital keys to the digital safe where all the coins were kept.
Since then, there have been questions as to whether or not Cotton actually died at all. Lawyers for Quadringa’s investors have even called for his body to be exhumed in order to settle the matter once and for all.
However, it turns out even crypto coins can be half-inched. According to US bitcoin publication Inside Bitcoins, there have been some 33 hacking incidents, globally, since 2011.
The exchange that fell victim to the first reported crypto hack in 2011 was also on the sharp end of the biggest hack in 2014.
In 2011, Tokyo exchange Mt.Gox was breached, losing about US$17.2 million in bitcoin.
It recovered from the incident, and by 2014, it was the leading exchange in the world, managing about 70% of all bitcoin transactions.
In February 2014, however, it suffered a second attack, losing about US$6.5 billion worth of bitcoin — or six percent of all bitcoin in existence at the time.
Three years later, Mt.Gox was bankrupt.
The Mt.Gox hack of 2014 is now infamous — it’s the subject of lengthy deep-dive articles, it’s explored in many tech podcasts and its even the subject of an ebook.
Three additional hacks were recorded in 2014, bringing the total loss to US$6.7 billion, and making the year an almost comical standout on a graph detailing losses over the past eight years.
By contrast, the second most-catastrophic year was 2016, which saw total losses of US$1.6 billion in cryptocurrency.
Interestingly, 2017 saw an increase in the number of hacks, but a dip in the value stolen. It’s perhaps no surprise that there was more criminal interest — this was the year of the crypto-boom, in which prices reached a peak of US$20,000.
However, the most hacks occurred in 2019, including that of prominent exchange Binance, which lost about US$60.5 million in bitcoin.