Crypto heist: A modern-day robbery

Cryptocurrency saw the light of day in 1983 when American cryptographer David Chaum developed a type of electronic currency named ecash. Ever since then, digital currencies have evolved and become increasingly popular among investors as well as hackers.

This has led to a new and advanced type of "bank" robbery, namely crypto heists. We’ll take a closer look at cryptocurrency and infamous cases of crypto heists that have caused severe damage to the victims.

Cryptocurrency: The foundation

We should first and foremost start at the beginning: what is cryptocurrency and how has it developed to what we know today?

Cryptocurrency is, in short, a digital payment system that doesn’t rely on any bank to verify the transaction – the transactions happen between accounts and can thus happen anonymously.

As mentioned above, it all began in 1983 – through the 80s and 90s cryptocurrency has developed as a type of "b-money" as developer Wei Dai calls it. One of the main features of the electronic money was that the investors could remain anonymous if they wished to be so.

One of the popular cryptocurrencies we know today is Bitcoin which was developed back in 2009 by developer Satoshi Nakamoto – this was followed by a handful of other types and brands of cryptocurrencies.

Only two countries have voted for Bitcoin and other types of cryptocurrencies to be accepted as legal tender and currency: El Salvador proposed and voted yes to the currency in June 2021, followed by Cuba just a few months later.

How does cryptocurrency work?

There are two main steps in the workings of cryptocurrency: blockchain and mining.

• Blockchain is the units – or fragments – a cryptocurrency is made of and works as a banking book, where you can see transactions and the information about them. This information is stored and updated by the owners of the cryptocurrency.

• Crypto-mining is another, and very crucial, step in a cryptocurrency transaction. The term describes the process by which new units of a cryptocurrency are created – in this process, transactions are further confirmed and added to the established blockchain.

Skilled hackers and programmers can code the transactions and blockchain, so the entire process of hacking becomes seamless and quick. One of the reasons why cryptocurrency has become so popular among online accounts and hackers is its anonymity; the blockchain doesn’t need personal information and the user can furthermore make transactions across the world, as long as they are dealing with other cryptocurrency users.

Since it’s a purely digital currency, you don’t own any physical "proof" of your cryptocurrency – you have the key to your digital vault which allows you to transfer the currency to wherever you wish.

Digital heists

With vaults come robberies. However, the traditional bank robbery has been exchanged with online heists of the valuable cryptocurrency.

Usually, a crypto heist becomes possible due to a vulnerability within a system. If this vulnerability is discovered by hackers, they often strive to exploit this and eventually steal cryptocurrency and data.

There are, however, several factors at play if hackers want their crypto heist to succeed. They need to:

• Track down accounts.
• Find the account’s potential vulnerabilities.
• Figure out the coding in the blockchain.

Hackers can get access to all this through typical cyberattacks such as phishing attacks, zero-day attacks and Man-in-the-Middle attacks. Even skilled users can fall for the hacker’s tricks.

Once the hackers have gained access to a cryptocurrency account, they can transfer the cryptocurrency to one of their accounts. Here, the anonymity of cryptocurrency and transfers helps the hackers tremendously since they can’t be traced and thus stand accused of the crime.

Examples of crypto heists

Now that we know what a crypto heist is, let’s take a look at some examples from recent years of the devastating trend in the world of cryptocurrency:

Crypto exchange FTX

In January 2023, the crypto exchange company FTX was victim of a big crypto heist, costing the company $415 million worth of in crypto currency. Shortly after, it was uncovered that FTX’s system had been hacked just before the heist.

Poly Network

In August 2021, the Poly Network protocol was victim of a major heist exploiting a vulnerability found in the system. This vulnerability cost Poly Network $610 million worth of cryptocurrency. The hackers who executed the heist transferred the most valuable assets to three different addresses.

Later, however, the hacker who carried out the heist announced that they would return the stolen tokens – they claimed the purpose of the heist was to show the vulnerability and thus how easy it was for them to do the heist.

Ronin Network

Just a year after the extensive heist at Poly Network, the Ethereum sidechain (used for the blockchain game Axie Infinity) Ronin Network, was the largest heist to this day. Ronin Network had assets worth $620 million stolen.

The heist was possible due to a compromised private key. The hacker managed to get access to a majority of Ronin Network’s security keys and thus get access to their vaults and assets.

What we can learn

Even though it’s a specific group of people using cryptocurrency there’s still a lesson to be learned with these heists.

Even the highly secure world of cryptocurrency can be targeted – and on a very large scale. These examples we’ve highlighted have all one common denominator; vulnerabilities in software led to major losses.

This emphasizes the importance of caution and vigilance when you’re out and about online; we recommend that you keep an eye open for cyber attacks and hackers’ usual ways of gaining access to your device and software through phishing, ransomware attacks and their other cunning ways to try to get through your cyber defense.