Best Practices For Staying Safe in The Crypto Industry: Lessons From Notable Hacks.
There is now a wide scale of adoption in the crypto space, which is certain to get even wider, with more newbies investing in the digital ecosystem.
Unfortunately, this also means cyber thefts and hacks have increased in the industry. This makes adopting safe and secure crypto protocols a necessity for digital asset holders.
In this article, we discuss some of the threats that have faced the industry and tips to ensure your investments are safe from malicious actors.
The Very Real Threats of Crypto Attacks
Last year, the cryptocurrency market lost over $2 billion to hackers, a 21% increase from previous years, however, individual hacking incidents were less than 300.
Investigations have shown some recurring themes in the perpetrated cyber thefts in the industry. These themes include; the alteration of multi-signatures, exploitation of vulnerable smart contracts, compromised private keys, and phishing attacks.
The series of hacking occurrences further revealed the vulnerability of the security of assets in the crypto industry and its deteriorating impact on all individuals and institutions.
Notable Crypto Hacks and How They Were Carried Out
In 2024 alone, the industry took massive hits and suffered some of its biggest hacks. They include:
- WaziriX hack: The Indian cryptocurrency exchange, WaziriX, lost 50% of its total assets (over $230 million) to hackers. The hackers were able to authorize the transactions by tricking the multiple signatories into the hot wallet where the funds were stored to alter a smart contract. This enabled the hackers to modify the required signatories and approve transactions.
- DMM Bitcoin hack: DMM, a Japanese cryptocurrency exchange platform was also a victim of cyber-attacks in 2024. The hack involved a transfer of 4,502 BTC from an unknown wallet to another unknown wallet. Although the root cause of the hack was not stated by the company, it was apparent that the loss took a great toll on the company as it announced in a subsequent statement that it would be shutting down.
- PlayDapp Hack: PlayDapp is a blockchain-based gaming platform that was hacked in 2024. The PlayDapp incident was a result of a vulnerability in the platform’s smart contract which the attacker exploited to transfer funds worth about $290 million
- GalaGames Hack: The Gala Games blockchain got hacked in 2024 as a result of a compromised private key of one of the authorized accounts allowed to carry out mint functions. The hacker leveraged this acquired authority to mint about 2 billion Gala tokens which were moved to a personal account afterwards.
- DAI Whale Hack: One of the most notable incidents of individual wallet hacking was the DAI Whale hack. The hacker made use of phishing to trick a whale into signing a transaction; giving ownership to the hacker who stole over 55 million DAI, worth $55.4 million from the wallet.
Other High-Profile Cases
- Poly Network (2021): In 2021, Poly Network, a cross-chain decentralized finance platform experienced a hack of about $600 million of crypto assets on various blockchains like Ethereum, Binance Smart Chain, Polygon, and some stablecoins amongst other tokens that were stolen. However, about 24 hours after the hack, the attacker began to return the stolen assets.
- Ronin Network (2022): Axis Infinity’s Ronin bridge suffered a loss of about $540 million as a result of a malicious PDF disguised as a job offer to one of the employees. Upon opening the PDF by the employee on his laptop, the hacker was able to gain access to the validator nodes and approve transactions on the bridge
- Mt. Gox (2011–2014): Mt Gox was one of Bitcoin's largest exchanges which experienced a hack that was believed to have started in 2011, where the hackers started to gain access to the exchange’s wallet and slowly transferred bitcoins over three years. The total amount of siphoned funds totaled $500 million in BTC, and the exchange had to abruptly halt withdrawals and eventually collapse. This is particularly interesting because, in today’s worth of bitcoin, this is the most expensive hack.
- FTX (2022): After filing for bankruptcy, the FTX exchange began to witness a transfer of millions of dollars into an unknown account which totaled $477 million. The hacker moved the stolen funds across various decentralized exchanges across different blockchains. Upon the news of bankruptcy and hacking, withdrawals were paused and most users of the platform were unable to withdraw the deposited funds.
The ByBit Hack
Bybit experienced what some call the biggest hack in the history of cryptocurrency where $1.46 billion was lost to hackers. The cyber attack has been alleged to be the work of Lazarus Group, a North Korea-affiliated hacker group, infamous for their previous exploits. The hackers used phishing attacks to mislead the authorized signers of the exchange’s multi-signatory cold wallet to approve the transfer of funds to their wallet.
The Bybit hack holds a lot of significance to the crypto industry not just because of how large the stolen funds were, but also because the exchange implemented top-notch secure procedures such as the use of cold storage with multiple signatories.
Regardless, the cold wallet of the exchange was hacked as a result of a malicious transaction initiated by the attacker which was approved by the signatories. The authorization of this transaction granted authority to the hacker, allowing them to transfer funds from the cold wallet of the exchange to a personal wallet.
The Bybit incident shows the importance of implementing various security measures to protect crypto assets. In addition to the use of multiple signatory wallets and multi-factor authentication, every other security tool should be enabled to further verify the authenticity of any incoming transactions or messages before approval or confirmation.
How You Can Stay Safe from Crypto Cyberattacks
These incidents are scary, especially for industry newcomers. However, you can ensure the security of your assets by following some of the below tips:
- Use secure platforms: To buy or sell cryptocurrencies, you need a wallet provider, a decentralized exchange (DEX), or a centralized exchange (CEX). However, in selecting a platform, you must research and use platforms that have implemented secure technological architecture and follow the best practices in their service delivery. Similarly, users should prioritize the use of platforms that have been licensed and regulated by adequate bodies, if applicable.
- Enable Multi-Factor Authentication: Poor access control remains one of the most common methods by which hackers steal funds. It is important to enable adequate and secure access control to funds. This can be through multi-factor authentication. It reduces the chances of unauthorized access because the hacker will have to compromise multiple authentications to gain unlikely access.
- Being wary of Phishing scams: Most users fall prey to fake websites and emails of hackers through phishing techniques. Hackers disguise the original link for projects or platforms to trick users into interacting with such fake links to get access to wallets. You must be wary of links found on social media platforms, comment sections, or tags and only click and interact with links that have been verified from the website of the project. This also includes the refusal to interact with any link or file sent by an unknown person.
- Use Cold Storage: Cold storage are hardware-based and offline storage option to store cryptocurrency. These storage options are not connected to the internet, they operate offline, which means they are not susceptible to cyber attacks or theft. Users are encouraged to explore storage options such as cold storage for assets to ensure better protection and security.
- Use Multi-Signature Wallets: Multi-signature wallets are wallets that require the signature of multiple parties to authorize a transaction. With the use of multi-signature wallets, the compromise of the private keys of one of the signers does not compromise the entire wallet like in a single-signature wallet. Multi-signature wallets enhance the security of assets by eliminating the occurrence of a single-point failure or attack
- Storage of seed-phrase offline: Just like the private key, the possession of a seed-phrase of the wallet gives access to such a wallet and the authority to sign transactions with the wallet. Devices are susceptible to digital attacks or threats such as malware, phishing, etc. Storing seed phrases offline provides immunity against such attacks that may compromise a device.
- Monitor Transactions and Account Activity: Most blockchains are public and as such transactions made on the blockchain are openly accessible. Users should be attentive to suspicious transactions, mark wallets that carry out such suspicious activity, and be wary of them.
How Switchere Ensures Maximum Security
Switchere remains one of the most reliable and secure platforms for buying and selling cryptocurrencies. The platform boasts of many features to ensure maximum security.
Some of these include:
- Regulatory compliance: Switchere offers crypto exchange services with the authority and license of the European Union. This implies that Switchere is under the obligation to follow the laws of the European Union about cryptocurrency assets.
- No custodial risk: With Switchere, you can store funds directly in your wallet without having to interact with other users. This design allows you to buy and swap cryptocurrencies instantly and safely.
- Advanced Encryption and Secure Transactions: Although Switchere is a non-custodial exchange where tokens remain in the possession of the users, the platform also implements advanced encryption techniques to secure transactions, including two-factor authentication (2FA) and 3D Secure Protocol.
- Fraud Prevention Measures: Switchere follows Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance regulations to ensure the early detection and prevention of fraud
- 24/7 Customer Support: Switchere offers customer support assistance all around the clock. This is to ensure that all complaints are effectively resolved and that smooth and efficient transactions are executed, providing users with assurance.
Conclusion
The rise of cyber threats over the years has shown the need for efficient solutions to be deployed to tackle the issue of insecurity and vulnerability of cryptocurrency assets.
Cryptocurrency platforms are often targeted for cyber thefts and hacks due to the large volume of transactions that occur on them.
After all, users cannot completely abandon the use of crypto platforms out of fear of hacks as it plays a fundamental role in buying and selling assets.
Instead, users should make use of secure crypto platforms such as Switchere, a CEX with implemented security features such as non-custodial transactions, fraud detection systems, regulatory compliance, and so much more.
Switchere affirms its commitment to prioritizing the security of cryptocurrency assets.
Please be advised, that this article or any information on this site is not an investment advice, you shall act at your own risk and, if necessary, receive a professional advice before making any investment decisions
Roman Klochko