Knowledge in a time of crisis
Big Think Live
Coronavirus coverage
Big Think Edge
Self-Motivation
David Goggins
Former Navy Seal
Career Development
Bryan Cranston
Actor
Critical Thinking
Liv Boeree
International Poker Champion
Emotional Intelligence
Amaryllis Fox
Former CIA Clandestine Operative
Management
Chris Hadfield
Retired Canadian Astronaut & Author
Learn
from the world's big
thinkers
Start Learning

Bitcoin burglaries: The 5 biggest cryptocurrency heists in history

At the beginning of July 2018, blockchain security firm CipherTrace reported that $731 million has been stolen from crypto exchanges this year alone.
23 August, 2018
Ocean's 0100101111001001001 (Big Think illustration by the editor)

As the popularity of cryptocurrencies continues to soar, so does the number of hackers targeting exchanges. In 2017, crypto exchanges reported losing approximately $266 million as a result of security breaches and heists. However, the first half of 2018 alone has reported that triple this amount has been stolen from crypto exchanges already.

At the beginning of July 2018, blockchain security firm CipherTrace reported that $731 million has been stolen from crypto exchanges this year alone. Nate Whitehall of CryptoSlate says:

“With each passing crypto hack, there’s more at stake. These heists aren’t just becoming more common. They’re becoming significantly more valuable.” 

In this article, we’ll take a look at some of the most prolific crypto heists in history.

Koichiro Wada, president of Coincheck Inc., bows during a news conference in Tokyo, Japan, on Thursday, March 8, 2018. Photographer: Kiyoshi Ota/Bloomberg via Getty Images 

The Coincheck heist

In January 2018, hackers found a loophole in the Coincheck exchange that allowed them to steal over 500 million NEM. This was worth around $530 million at the time. While only the NEM was breached and other funds remained secure, NEM Foundation has stressed that the hack was nothing to do with the security of the XEM cryptocurrency.

They have insisted that the blame is entirely on Coincheck, saying that it was a result of its ‘relaxed security measures’. Because such a significant percentage of XEM was compromised, many people immediately assumed that NEM would carry out a hard fork in order to recover the funds. However, this did not occur. Coincheck now has the reputation of being the victim of the biggest crypto exchange hack in history.

Bitcoin trader Kolin Burges from Britain holds up a placard to protest against Tokyo-based bitcoin changer MtGox in front of the company's office in Tokyo on February 26, 2014. YOSHIKAZU TSUNO/AFP/Getty Images

The Mt. Gox hack

Up until the recent Coincheck hack, the Mt. Gox Hack was the biggest crypto heist in history. It still remains the biggest Bitcoin heist to have ever occurred.

Mt. Gox was a crypto exchange based in Tokyo, Japan. Between 2013 and 2014, it handled over 70% of all worldwide Bitcoin transactions. Unfortunately, by February 2014, the exchange had declared bankruptcy.

The hacker stole approximately 850,000 Bitcoins - worth around $450 million at the time. What’s more, this was approximately 6% of all Bitcoin in existence at the time. Therefore, at the time of the theft, this was a significant percentage of the total crypto market cap. In that sense, this was even bigger than the Coincheck hack. 200,000 of the stolen Bitcoins were eventually recovered. However, approximately 650,000 remain lost forever.

Founder of Ethereum Vitalik Buterin during TechCrunch Disrupt London 2015. Photo by John Phillips/Getty Images for TechCrunch.

The DAO attack that led to the creation of Ethereum Classic (ETC)

A ‘DAO’ is a Decentralized Autonomous Organization that aims to eliminate the requirement for third-parties in governing and to ultimately create a structure that has decentralized control. It does this by turning the rules and decision-making apparatus of an organization into code.

‘The DAO’ was the name of a particular DAO. It was launched on the 30th April 2016 and had a 28-day funding window. It was extremely popular - so much so that by the end of its funding period, it was the largest crowdfunded organization in history.

Throughout the crowdsale, several people expressed concerns about The DAO’s security and suggested that it could be vulnerable to attack. Despite this, it went on to raise over $150 million from 11,000 members -  far more than its creators had ever imagined.

On June 12th, 2016, Stephen Tual, one of the creators of The DAO, announced that a "recursive call" bug had been found in the code. However, at the end of his post, stressed that "this is NOT an issue that is putting any DAO funds at risk today." Unfortunately, Tual turned out to be very wrong. By the time the team had identified the bug and begun to fix it, a hacker was already exploiting it and draining The DAO of the ether it had collected from its token sales.

By the 18th of June, less than a week after the announcement had been made, the hacker had already managed to drain over 3.6 million ether (worth approximately $70 million) into a “child DAO”. This alone led the price of Ether to fall drastically from $20 to $13.

As a result of this catastrophe, an Ethereum hard-fork was proposed, with 89% of Ether holders voting in favor of it. This led to the creation of Ethereum Classic (ETC) - a new cryptocurrency which shares the data on the Ethereum blockchain up until block 1920000.

Bitfinex main page, c/o Creative Commons

The Bitfinex exchange heist

Bitfinex is currently ranked as the second largest crypto exchange in terms of daily trading volumes. However, in August 2016, the exchange suffered a hacking heist that resulted in the loss of over 120,000 Bitcoins, worth around $66 million. Within hours of the attack, the value of Bitcoin had dropped from over $600 to $540. Moreover, the users never received compensation for their lost Bitcoins. Instead, the exchange paid users in BFX tokens for their losses and promised to buy these tokens back at a later date.

The platform experienced another cyber attack in June 2018. However, this attack only affected trading operations. Thankfully, no user accounts were compromised.

c/o Pxhere

The BitFloor exchange heist

Despite being relatively unknown, the BitFloor heist remains one of the biggest Bitcoin heists in history. It resulted in the loss of over 24,000 Bitcoins. At the time it was considered relatively small. However, in today’s terms, the hack would be worth a surplus of $141 million. 

Back in 2012, BitFloor was one of the largest competitors of Mt. Gox. However, it had to shut down abruptly when hackers gained access to the private keys of users. This was made possible because the hackers were able to gain access to the users’ private keys, which were stored in an extremely insecure manner in an unencrypted state, online, for backups.

Luckily, the exchange was able to refund users for their losses. However, it was ultimately forced to shut down.

How accountability at work can transform your organization

If you don't practice accountability at work you're letting the formula for success slip right through your hands.

Videos
  • What is accountability? It's a tool for improving performance and, once its potential is thoroughly understood, it can be leveraged at scale in any team or organization.
  • In this lesson for leaders, managers, and individuals, Shideh Sedgh Bina, a founding partner of Insigniam and the editor-in-chief of IQ Insigniam Quarterly, explains why it is so crucial to success.
  • Learn to recognize the mindset of accountable versus unaccountable people, then use Shideh's guided exercise as a template for your next post-project accountability analysis—whether that project was a success or it fell short, it's equally important to do the reckoning.
work success personal growth business leadership failure

What if Middle-earth was in Pakistan?

Iranian Tolkien scholar finds intriguing parallels between subcontinental geography and famous map of Middle-earth

Could this former river island in the Indus have inspired Tolkien to create Cair Andros, the ship-shaped island in the Anduin river?

Image: Mohammad Reza Kamali, reproduced with kind permission
Strange Maps
  • J.R.R. Tolkien himself hinted that his stories are set in a really ancient version of Europe.
  • But a fantasy realm can be inspired by a variety of places; and perhaps so is Tolkien's world.
  • These intriguing similarities with Asian topography show that it may be time to 'decolonise' Middle-earth.
Keep reading Show less
Europe Asia india iran literature storytelling map

Giant whale sharks have teeth on their eyeballs

The ocean's largest shark relies on vision more than previously believed.

An eight-metre-long Whale shark swims with other fish at the Okinawa Churaumi Aquarium on February 26, 2010 in Motobu, Okinawa, Japan.

Photo by Koichi Kamoshida/Getty Images
Surprising Science
  • Japanese researchers discovered that the whale shark has "tiny teeth"—dermal denticles—protecting its eyes from abrasion.
  • They also found the shark is able to retract its eyeball into the eye socket.
  • Their research confirms that this giant fish relies on vision more than previously believed.
Keep reading Show less
animals oceans water fish evolution marine biology

A massive star has mysteriously vanished, confusing astronomers

A gigantic star makes off during an eight-year gap in observations.

Image source: ESO/L. Calçada
Surprising Science
  • The massive star in the Kinsman Dwarf Galaxy seems to have disappeared between 2011 and 2019.
  • It's likely that it erupted, but could it have collapsed into a black hole without a supernova?
  • Maybe it's still there, but much less luminous and/or covered by dust.

A "very massive star" in the Kinman Dwarf galaxy caught the attention of astronomers in the early years of the 2000s: It seemed to be reaching a late-ish chapter in its life story and offered a rare chance to observe the death of a large star in a region low in metallicity. However, by the time scientists had the chance to turn the European Southern Observatory's (ESO) Very Large Telescope (VLT) in Paranal, Chile back around to it in 2019 — it's not a slow-turner, just an in-demand device — it was utterly gone without a trace. But how?

The two leading theories about what happened are that either it's still there, still erupting its way through its death throes, with less luminosity and perhaps obscured by dust, or it just up and collapsed into a black hole without going through a supernova stage. "If true, this would be the first direct detection of such a monster star ending its life in this manner," says Andrew Allan of Trinity College Dublin, Ireland, leader of the observation team whose study is published in Monthly Notices of the Royal Astronomical Society.

So, em...

Between astronomers' last look in 2011 and 2019 is a large enough interval of time for something to happen. Not that 2001 (when it was first observed) or 2019 have much meaning, since we're always watching the past out there and the Kinman Dwarf Galaxy is 75 million light years away. We often think of cosmic events as slow-moving phenomena because so often their follow-on effects are massive and unfold to us over time. But things happen just as fast big as small. The number of things that happened in the first 10 millionth of a trillionth of a trillionth of a trillionth of a second after the Big Bang, for example, is insane.

In any event, the Kinsman Dwarf Galaxy, or PHL 293B, is far way, too far for astronomers to directly observe its stars. Their presence can be inferred from spectroscopic signatures — specifically, PHL 293B between 2001 and 2011 consistently featured strong signatures of hydrogen that indicated the presence of a massive "luminous blue variable" (LBV) star about 2.5 times more brilliant than our Sun. Astronomers suspect that some very large stars may spend their final years as LBVs.

Though LBVs are known to experience radical shifts in spectra and brightness, they reliably leave specific traces that help confirm their ongoing presence. In 2019 the hydrogen signatures, and such traces, were gone. Allan says, "It would be highly unusual for such a massive star to disappear without producing a bright supernova explosion."

The Kinsman Dwarf Galaxy, or PHL 293B, is one of the most metal-poor galaxies known. Explosive, massive, Wolf-Rayet stars are seldom seen in such environments — NASA refers to such stars as those that "live fast, die hard." Red supergiants are also rare to low Z environments. The now-missing star was looked to as a rare opportunity to observe a massive star's late stages in such an environment.

Celestial sleuthing

In August 2019, the team pointed the four eight-meter telescopes of ESO's ESPRESSO array simultaneously toward the LBV's former location: nothing. They also gave the VLT's X-shooter instrument a shot a few months later: also nothing.

Still pursuing the missing star, the scientists acquired access to older data for comparison to what they already felt they knew. "The ESO Science Archive Facility enabled us to find and use data of the same object obtained in 2002 and 2009," says Andrea Mehner, an ESO staff member who worked on the study. "The comparison of the 2002 high-resolution UVES spectra with our observations obtained in 2019 with ESO's newest high-resolution spectrograph ESPRESSO was especially revealing, from both an astronomical and an instrumentation point of view."

Examination of this data suggested that the LBV may have indeed been winding up to a grand final sometime after 2011.

Team member Jose Groh, also of Trinity College, says "We may have detected one of the most massive stars of the local Universe going gently into the night. Our discovery would not have been made without using the powerful ESO 8-meter telescopes, their unique instrumentation, and the prompt access to those capabilities following the recent agreement of Ireland to join ESO."

Combining the 2019 data with contemporaneous Hubble Space Telescope (HST) imagery leaves the authors of the reports with the sense that "the LBV was in an eruptive state at least between 2001 and 2011, which then ended, and may have been followed by a collapse into a massive BH without the production of an SN. This scenario is consistent with the available HST and ground-based photometry."

Or...

A star collapsing into a black hole without a supernova would be a rare event, and that argues against the idea. The paper also notes that we may simply have missed the star's supernova during the eight-year observation gap.

LBVs are known to be highly unstable, so the star dropping to a state of less luminosity or producing a dust cover would be much more in the realm of expected behavior.

Says the paper: "A combination of a slightly reduced luminosity and a thick dusty shell could result in the star being obscured. While the lack of variability between the 2009 and 2019 near-infrared continuum from our X-shooter spectra eliminates the possibility of formation of hot dust (⪆1500 K), mid-infrared observations are necessary to rule out a slowly expanding cooler dust shell."

The authors of the report are pretty confident the star experienced a dramatic eruption after 2011. Beyond that, though:

"Based on our observations and models, we suggest that PHL 293B hosted an LBV with an eruption that ended sometime after 2011. This could have been followed by
(1) a surviving star or
(2) a collapse of the LBV to a BH [black hole] without the production of a bright SN, but possibly with a weak transient."

cosmos eso nasa space telescopes universe astronomy
Future of Learning

Changing the way we grade students could trigger a wave of innovation

How students apply what they've learned is more important than a letter or number grade.

Scroll down to load more…
Quantcast