Top 12 Crypto Hacks In 2022 And What We Learn From Them

Top 12 Crypto Hacks In 2022 And What We Learn From Them

Cryptocurrency
November 22, 2022 by Diana Ambolis
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The rise of cryptocurrencies as one of the most valued breakthroughs in recent years has been hampered by the weight of unpredictability. Cryptocurrencies’ underlying blockchain technology provides a strong framework for providing numerous value advantages over other digital currencies. A vast ecosystem of decentralized applications and smart contracts has also been created by blockchain. Some
Top 12 Crypto Hacks In 2022 And What We Learn From Them

The rise of cryptocurrencies as one of the most valued breakthroughs in recent years has been hampered by the weight of unpredictability. Cryptocurrencies’ underlying blockchain technology provides a strong framework for providing numerous value advantages over other digital currencies. A vast ecosystem of decentralized applications and smart contracts has also been created by blockchain.

Some of the biggest cryptocurrency hacks have affected the development of blockchain and Crypto, shaking the foundations of trust in cryptocurrencies and blockchain applications. Can users trust cryptocurrency and blockchain systems with their valued assets? Individuals who are interested in cryptocurrencies make decisions based on their fears about volatility, and crypto hacks may further deter them. The post that follows provides a summary of some of the largest hacks to date in the cryptosphere.

The Importance of Understanding Crypto Hacks

Blockchain technology is one of the key issues that pop up when looking for the greatest cryptocurrency hacks. Blockchain should provide cryptographic security, right? Blockchain has been designed to provide decentralization, scalability, and security, but it sometimes finds it difficult to strike a balance between the three value criteria.

Blockchain-based apps, like cryptocurrencies, also put the burden of application and asset security on the user. Therefore, a minor mistake made by users could result in breaches and the theft of assets. The huge number of cryptocurrency attacks that occur each year demonstrates the significance of understanding them and developing safety measures.

Additionally, hackers look for weaknesses in the code that powers blockchain and cryptocurrency applications. For instance, hackers compromised assets worth $1.1 million by taking advantage of a software flaw in the Audius web3 music platform. Cryptocurrency hacking cost the market roughly $2 billion in the first half of 2022. Alarmingly, by October 2022, there had been about 125 cryptocurrency hacks, raising the total to $3 billion. The cumulative damages from bitcoin breaches in 2022 may surpass the $3.2 billion threshold set in 2021 if the size and severity of these attacks rise.

Top 12 Crypto Hacks in recent times

With each year that goes by, the losses resulting from cryptocurrency attacks get bigger and bigger. Centralized exchanges have historically been the main targets of cryptocurrency hacks, claims Chainlist. However, because of their reliance on smart contract codes, DeFi devices have become the latest targets of hackers.

A review of famous crypto attacks could therefore provide a clear understanding of what went wrong with the systems. Additionally, you can get knowledge about security and see how protocols from recent crypto attacks were recovered. Here is a list of noteworthy cryptocurrency hacks thus far, along with a thorough explanation of all related activities.

Bridge of Axe Infinity Ronin

One of the most notable cryptocurrency hacks of 2022 would have to be the $625 million attack on Ronin Network. Hackers have taken advantage of a large number of the cryptographic keys needed to safeguard the security of the Axie Infinity cross-chain bridge. It seems that an Axie developer clicked on a phony PDF job posting. In addition to transferring about 25.5 million USDC and 173,600 ETH to their wallets, the attacker also took four of the nine private keys needed for transaction authentication.

The network discovered there had been a hack when a customer tried to withdraw money legally. The creators of Axie Infinity, Sky Mavis, assert that they have enlisted the aid of forensic cryptographers, law enforcement officials, and investors in order to stop further monetary losses. After the breach, The Ronin Bridge increased its validators, albeit at a cost to user confidence.

Crypto.com

Another famous example of a cryptocurrency breach is the well-known controlled exchange Crypto.com. A cryptocurrency leak cost it $35 million on January 17, 2022. What was the cause of the Crypto.com hack? When a solution is offered, two-factor authentication is disabled. Customers’ Bitcoin and Ether were taken from their accounts by hackers, who also deleted the crucial identity verification feature.

The CEO of Crypto.com, however, at first denied that funds had been misappropriated in the bitcoin breach. The exchange was forced to acknowledge the hack a few days later. In response to the hack, the company is prepared to implement multi-factor authentication for user passwords.

Binance

The next incident to be added to the list of recent significant cryptocurrency hacks is the case of the Binance exchange. One of the most well-known attacks was the Binance exchange breach in October 2022, which cost $570 million. The hack’s primary entry point was the cross-chain bridge known as the BSC Token Hub. Before stealing 2 million BNB tokens, hackers utilized the bridge to their advantage and generated more of them. Because of the incident, blockchain security needs to be improved even more, with a particular emphasis on correcting security holes in smart contract code.

The IRA Financial Trust 

A cryptocurrency breach on February 8, 2022, cost The IRA Financial Trust over $37 million. It is a retirement and pension payment system that uses cryptocurrencies and may encourage more people to accept cryptocurrencies. Hackers were able to compromise platform assets and get beyond all security measures, though, because they had access to a master key.

In retaliation, IRA Financial Trust criticized Gemini for the hack. It appears that the IRA Financial Trust stored customer funds using the Gemini cryptocurrency exchange’s services. Because the bitcoin exchange has been accused of incompetence that led to the attack, security improvements are required.

Wormhole

If Wormhole, a DeFi application, appeared on the list of the greatest cryptocurrency hacks to date, it would also get notice. On February 2, 2022, a cryptocurrency hack that Wormhole suffered while acting as a Solana to Ethereum bridge cost it $325 million. Hackers have created and withdrawn wrapped Ether without putting up any collateral by making use of the platform’s smart contracts.

The smart contract vulnerability became possible since the protocol’s GitHub repository underwent an upgrade that had not been implemented on the live project. The Wormhole breach appears to have been the largest theft of Solana, one of the biggest threats to Ethereum, with a loss of SOL tokens valued at $47 million.

The network then had to replenish the project’s assets because the money could not be recovered. Jump Crypto, the venture capital business that backs the Wormhole technology, keeps the affected Solana-based platforms financially stable. Additionally, Wormhole changed the name of its bridge to “Portal.” The current value of the assets on the DeFi platform is $480 million.

Quantum Bridge

In January 2022, the Qubit QBridge hack made news as well, with losses of roughly $80 million. It is one of the prominent recent crypto hacks that demonstrates the exploitation of flaws in the coding of smart contracts. Similar to the Wormhole vulnerability, hackers abused the QBridge smart contract bug from Binance-based Qubit Finance.

Without putting up any collateral, the hackers were able to create wrapped Ether tokens. On the other hand, Qubit Finance’s response to the breach serves as a validated model for recouping from hacks. The Qubit Finance development team cut back on the number of people working on the protocol and redesigned the platform as a DAO.

Beanstalk

The hack on Beanstalk would be included in the overview of other cryptocurrency hacks highlighted recently. In reality, the Beanstalk hack demonstrated how “flash loans” can present a weakness for DeFi platforms. The hacker obtained a $1 billion flash loan to take advantage of the Beanstalk DeFi platform. A cutting-edge and practical DeFi product called a “flash loan” enables consumers to borrow cryptocurrencies for shorter periods of time. The hacker put out a request to donate money to Ukraine, which was approved, and invited people to put up collateral for the project.

The hacker then took control of 67% of the project using the $1 billion flash loan. The hackers permitted fund transfers to the cryptocurrency wallets without loan payback after they had a controlling share. It’s interesting to note that only 13 seconds were needed to complete the hack. Developers’ reaction to the breach centered on halting protocol operations and conducting audits. In addition, Beanstalk is striving to raise the necessary sum of money with the intention of reopening deposits.

Also, read – How Crypto Scams Work — A Reminder In The Age Of Digital World

Nomad Token Bridge

With a loss of approximately $190 million, the Nomad Token Bridge attack also ranks as one of the greatest cryptocurrency hacks. The cross-chain protocol caused significant damage and quickly drained cryptocurrency reserves. It appears that the breach was linked to flaws in the protocol that were introduced by a regular update. Only by altering the code linked to a previous transaction were hackers able to take advantage of the vulnerability for asset transfers.

The attack on Nomad Token Bridge has an issue because it began with one hacker and spread to include many more. In fact, it was the first decentralized crowd looting for a significant cryptocurrency bridge. Additionally, the disorganized course of events in the Nomad Token Bridge provides evidence of the development of cryptocurrency hacks. In reaction to the attack, the Nomad protocol has rebranded itself as a “security-first cross-chain communications protocol.”

Harmony Bridge

The attack on Harmony Bridge would be one of the cases in the list of crypto hacks. It caused losses of $100 million and provided another security lesson for cryptocurrencies. The Lazarus Group, which has ties to North Korea, was the root of the hack.

Two of the Binance-Ethereum Bridge’s five security keys appear to have been taken by the Lazarus Group. As a result, the evil organization could accept deals and steal money from the bridge. Harmony Bridge requires four of the five validator keys to reach a consensus on transactions in reaction to the event. However, it hasn’t developed any concrete measures for repaying the users.

Cashio

Cashio is one of the most recent entries among well-known cryptocurrency hacks. It suffered a March 2022 hack with a special exploit that cost it about $52 million. Hackers used a slew of phony accounts and the endless mint bug to deposit worthless collateral for the CASH stablecoin on Cashio. The CASH stablecoin’s peg fell to zero as a result of the attack. The fact that the Cashio platform has been unable to recover from the attack is the more concerning aspect of the situation.

Fei Protocol

One noteworthy crypto hack in 2022 that deserves everyone’s attention is the one on the Fei protocol. On April 30, 2022, a hack occurred that cost $80 million in assets to replace. Hackers used a flaw in the crypto lending protocol called reentrancy to get loans and remove the collateral for such loans.

Users of Fei came up with an intriguing suggestion in response to the attack. The idea aimed to give investors more leverage by allowing hackers to recoup their bad loans. After recovering from the breach, the FEI stablecoin has been able to keep its peg to the dollar.

Wintermute

The prominent cryptocurrency market maker Wintermute is the final suspect in the recent coin breaches. When the DeFi platform was recently hacked in September 2022, damages of roughly $162 million were incurred. Wintermute has a lot to deal with because it owes other DeFi market participants more than $200 million. Following the hack, Wintermute offered a 10% reward to the hacker who would restore the stolen money.

Last Words

For crypto fans, the summary of the most significant attacks in recent memory portrays a bleak image. Even blockchain’s cryptographic security cannot prevent cryptocurrency theft. You must have taken note of the various root causes of prominent cryptocurrency hacks in addition to the ever-changing complexity.

The specifics of the breaches also indicate how protocols could bounce back from any hypothetical hacks at the same time. The list of cryptocurrency hacks highlights the necessity of understanding the best practices for blockchain security, which is the most crucial thing of all. Now is the time to expand your knowledge about blockchain and crypto security.