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.
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.
“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.
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.
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.
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.
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.
Join Radiolab's Latif Nasser at 1pm ET on Monday as he chats with Malcolm Gladwell live on Big Think.
University of Utah research finds that men are especially well suited for fisticuffs.
- With males having more upper-body mass than women, a study looks to find the reason.
- The study is based on the assumption that men have been fighters for so long that evolution has selected those best-equipped for the task.
- If men fought other men, winners would have survived and reproduced, losers not so much.
Built for mayhem<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjY2NDIyMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMzk4NTQ2OX0.my6nML12F3fEQu3H4G0BScdqgaMZkRQHxgyj-Cmjmzk/img.jpg?width=980" id="906fc" class="rm-shortcode" data-rm-shortcode-id="dd77af7a881631355ed8972437846394" data-rm-shortcode-name="rebelmouse-image" />
Image source: Ollyy/Shutterstock<p>The researchers are, of course, talking averages here, not stating a rule: There are plenty of accomplished female pugilists, as well as lots of males who have no idea how to throw a punch.</p><p>Even so, says co-author <a href="https://www.wofford.edu/academics/majors-and-programs/biology/faculty-and-staff" target="_blank">Jeremy Morris</a> says, "The general approach to understanding why sexual dimorphism evolves is to measure the actual differences in the muscles or the skeletons of males and females of a given species, and then look at the behaviors that might be driving those differences."</p><p>Carrier has been interested in the idea that millennia of male fighting has shaped certain structures in male bodies. Previous research has reinforced his hunch:</p> <ul> <li><a href="https://jeb.biologists.org/content/216/2/236" target="_blank">When a hand is formed into a fist, its structure is self-protective</a>.</li> <li><a href="https://unews.utah.edu/flat-footed-fighters/" target="_blank">Heels planted firmly on the ground augment upper-body power</a>.</li> <li><a href="https://www.ncbi.nlm.nih.gov/pubmed/24909544" target="_blank">A study examined facial bone structure as being especially well-suited for taking a punch</a>.</li> </ul> <p>(That last one is our favorite. Do you know the German word "<a href="https://www.urbandictionary.com/define.php?term=Backpfeifengesicht" target="_blank">backpfeifengesicht</a>?" It's an adjective describing "a face that badly needs a punching.")</p><p>"One of the predictions that comes out of those," asserts Carrier, "is if we are specialized for punching, you might expect males to be particularly strong in the muscles that are associated with throwing a punch."</p>
Testing the theory<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjY2NDIzMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwNzMxMTE2MH0.UXJICMy57UPYUWskhK98alctOrPidJL9yxMkz3HDQrM/img.jpg?width=980" id="98718" class="rm-shortcode" data-rm-shortcode-id="b12287684ac3e740b70392e6433a6b8f" data-rm-shortcode-name="rebelmouse-image" />
Image source: Ollyy/Shutterstock<p>The researchers measured the punching — and spear-throwing — force of 20 men and 19 women. The assumption was that early humans were punchers <em>and</em> spear-throwers.</p><p>Prior to testing, each participant had filled out an activity questionnaire so that "we weren't getting couch potatoes, we were getting people that were very fit and active," says Morris.</p><p>For punching, participants operated a hand crank that required movement similar to throwing a haymaker. The purpose of the hand crank was to spare participants any damage that might be inflicted on their fists by throwing actual punches. Subjects were also measured pulling a line forward over their heads to assess their strength at throwing a spear.</p><p>Even though all of the participants, male and female, were routinely fit, the average power of males was assessed as being 162% greater than females. There were no gender differences in throwing strength recorded. Other untested, though presumably likely, hand-to-hand combat activities come to mind including tackling, clubbing, running, kicking, scratching, and biting.</p><p>Carrier's takeaway: "This is a dramatic example of sexual dimorphism that's consistent with males becoming more specialized for fighting, and males fighting in a particular way, which is throwing punches."</p>
Boys will be boys<p>It, er, strikes us as odd that, even in science fiction — hi-tech weaponry notwithstanding — the hero <em>is</em> going to wind up duking it out with some bad guy, or alien, in the climactic battle. What is it about men punching, anyway? Are they more sexually attractive? The study suggests so:</p><p style="margin-left: 20px;"><em>The results of this study add to a set of recently identified characters indicating that sexual selection on male aggressive performance has played a role in the evolution of the human musculoskeletal system and the evolution of sexual dimorphism in hominins.</em></p><p>It's tough to contribute to the gene pool after being killed in battle.</p><p>Also, while the authors aren't <em>quite</em> saying that males' historical fighting role is mandated by biology and not by social expectations, neither are they quite <em>not</em> saying it.</p><p>As Carrier explain to <a href="https://attheu.utah.edu/facultystaff/carrier-punch/" target="_blank">theU</a>: "Human nature is also characterized by avoiding violence and finding ways to be cooperative and work together, to have empathy, to care for each other, right? There are two sides to who we are as a species. If our goal is to minimize all forms of violence in the future, then understanding our tendencies and what our nature really is, is going to help."</p>
The Labour Economics study suggests two potential reasons for the increase: corruption and increased capacity.
Cool hand rebuke<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQyMTIyNy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NjY1NTYyOH0.0MCPKN3If94mYCNf3mMNrnTvJXjXN_bKLhgk9203EXk/img.jpg?width=917&coordinates=0%2C0%2C0%2C0&height=453" id="1627b" class="rm-shortcode" data-rm-shortcode-id="6d76421ba1ea0de4b09956b97e80c384" data-rm-shortcode-name="rebelmouse-image" />
A chart showing prison population rates (per 100,000 people) in 2018. The United States has the highest rate of incarceration in the world.
Who profits with for-profit prisons?<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="97ac37e6c7f6f22ec130ea2d56871701"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/dB78NV2WpWc?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>The Labour Economics study suggests that privately-run prisons do convicts a few favors at the moment of sentencing. However, proponents of private prisons often point to other benefits when making their case. Specifically, they argue that private prisons reduce operating costs, stimulate innovation in the correctional system, and reduce recidivism—the rate at which released prisoners are rearrested and return to prison.</p><p>In regard to recidivism, the research is mixed. <a href="https://journals.sagepub.com/doi/abs/10.1177/0011128799045001002" target="_blank">One study</a> compared roughly 400 former prisoners from Florida, 200 released from private prisons and 200 from state-run facilities. It found the private-prison cohort maintained lower rates of recidivism. However, <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1745-9133.2005.00006.x" target="_blank" rel="noopener noreferrer">another Florida study</a> found no significant rate differences. And two other studies—one from <a href="https://journals.sagepub.com/doi/abs/10.1177/0011128799045001002" target="_blank" rel="noopener noreferrer">Oklahoma</a> and another out of <a href="https://journals.sagepub.com/doi/abs/10.1177/0734016813478823" target="_blank" rel="noopener noreferrer">Minnesota</a>, both comparing much larger cohorts than the first Florida study— found that prisoners leaving private prisons had a greater risk of recidivism.</p><p>The research is also inconclusive regarding cost savings. <a href="https://www.hamiltonproject.org/assets/files/economics_of_private_prisons.pdf" target="_blank" rel="noopener noreferrer">A Hamilton Project analysis</a> noted that such comparisons are difficult because private prisons, like all private companies, are not required to release operational details. In comparing what studies were available, the authors estimate the costs to be comparable and that "in practice the primary mechanism for cost saving in private prisons is lower salaries for correctional officers"—about $7,000 less than their public peers. They add that competition-driven innovation is lacking as the three largest firms control nearly the entire market.</p><p>"We aren't saying private prisons are bad," Galinato said. "But states need to be careful with them. If your state has previous and regular issues with corruption, I wouldn't be surprised to see laws being more skewed to give longer sentences, for example. If the goal is to reduce the number of incarcerated individuals, increasing the number of private prisons may not be the way to go."</p>
What exactly does "questions are the new answers" mean?
- Traditionally, intelligence has been viewed as having all the answers. When it comes to being innovative and forward-thinking, it turns out that being able to ask the right questions is an equally valuable skill.
- The difference between the right and wrong questions is not simply in the level of difficulty. In this video, geobiologist Hope Jahren, journalist Warren Berger, experimental philosopher Jonathon Keats, and investor Tim Ferriss discuss the power of creativity and the merit in asking naive and even "dumb" questions.
- "Very often the dumb question that is sitting right there that no one seems to be asking is the smartest question you can ask," Ferriss says, adding that "not only is it the smartest, most incisive, but if you want to ask it and you're reasonably smart, I guarantee you there are other people who want to ask it but are just embarrassed to do so."