What is Crypto Hacking?
There are mainly two types of hackings which can occur in cryptocurrency – Wallet Hacks and Exchange Hacks.
Wallet hacks occur when there is a weakness in the encryption of private keys. As most private keys are stored in hot wallets and connected to the internet, this renders the keys vulnerable to outsiders’ access to the softwares and devices, resulting in hacking. As exchanges often hold cryptocurrency in their reserves for liquidity and the private keys of their customers; theft can easily occur once the hackers gain access to the keys.
After the meltdown of FTX, crypto hacking took over the headlines again when they suffered a heist, with an estimated $477 million worth of cryptocurrency stolen from the platform.
In October 2022, Binance, the world’s largest crypto exchange was hacked, resulting in losses of up to $100 million. Harmony and Nomad, which allow users to transfer crypto tokens between different blockchains, were hacked in June and August respectively, resulting in losses totalling up to $300 million.
How does Crypto Hacking affect the crypto community?
Hacking cryptocurrency is still regarded to be in its infancy and is set to evolve and grow over the years. Furthermore, yearly statistics of cryptocurrency breaches are constantly breaking records, with 2021 recording over $14 billion stolen by hackers. Stolen funds often have a very slim chance of recovery and the lack of insurance for cryptocurrency users, thus displaying the lack of security and extreme risk of cryptocurrency.
When Binance was breached, the company had to temporarily suspend transactions and transfer of funds. This, added with the significant increase in volatility post-crypto hacking, may be proven to be a formula for a crypto calamity.
How to prevent Crypto Hacking?
While Bitcoin exchange security measures have been proactive to prevent malicious crimes, with a successful decrease in the impact of heists, these traditional risk management precautions have been proven to be insufficient to prevent theft.
To protect investments, it is optimal to secure a cold wallet instead of storing cryptocurrencies on the exchange platform. It is also crucial to use a secure private internet connection when transacting, update passwords regularly, and activate two-factor authentication on exchange platforms.
How can Regtank help?
The Regtank solution is designed and developed by following the Financial Action Task Force (FATF) guidelines. The solution enables companies to fulfil the latest regulatory obligations in multiple jurisdictions and keep up the fight against ML/FT activities with a customisable risk engine. Adopting a risk-based approach, Regtank is constantly improving on the solution and is aligned with the Monetary Authority of Singapore’s (MAS)’s supervisory expectation on name screening practices.
