The decentralized Bitcoin network has no single point of failure, which cannot exactly be said of the centralized Bitcoin exchanges. An overview of the five most devastating stock market hacks in Bitcoin history.
The Japanese Exchange Coincheck suffered a serious attack in early 2018. Hackers have succeeded in withdrawing over 500 million units of the cryptocurrency NEM from the wallets of the exchange. The damage amounted to over 450 million euros; 216,000 customers were affected. The Exchange kept customer funds in hot wallets instead of keeping them offline. The company paid for the damage from its own resources.
The Mt.Gox hack has long been the epitome of a disastrous Bitcoin exchange hack. In 2014, the exchange — which was responsible for over 70 percent of BTC transactions at the time — was relieved by a staggering 850,000 Bitcoin. At that time, the equivalent value: almost 400 million euros. Mt.Gox was originally a magic-the-gathering card exchange platform and was founded by Jed McCaleb, who, however, left his place for Mark Karpelès and later took on key positions at Ripple and finally at Stellar. Mt.Gox filed for bankruptcy after the incident.
Bitfinex also has no white vest when it comes to hacks. In a momentous attack on the trading platform, hackers captured a whopping 120,000 BTC in 2016. Bitfinex is still trying to get hold of the coins again. In August, the Bitcoin Exchange offered a reward of up to $ 400 million if it was to get all the bitcoins back. The offer is also aimed at the perpetrators: The Exchange promises to preserve their anonymity, should they decide to return the 120,000 BTC. So far, however, the hackers have shown little interest in the advances on the Bitcoin exchange.
Not Bitcoin, but NANO were the masterminds behind the attack on the Italian crypto exchange Bitgrail. In February 2018, the perpetrators were able to withdraw NANO from the Exchange wallets for a total of 160 million euros. The operators of the exchange put the blame on the developers of Nano, a bug would have led to the failure of their Nano full node and ultimately made the attack possible. The accusation was rejected by Nanos. The competent Florence court ordered the final closure of the exchange in May 2018.
The fact that centralized Bitcoin exchanges offer a single point of failure does not only apply to external attacks. Gerry Cotten, the late CEO of the Canadian Bitcoin exchange QuadrigaCX, had apparently been messing around with customer money for years. Cotten is said to have traded with fake accounts and fake account balances with his customers. “Fake” Bitcoin were also used, BTC that only existed in the Excel tables of the now closed exchange. In this way, Cotten embezzled 22,488 Bitcoin, 429,966 Ether as well as Bitcoin Cash, BSV, Bitcoin Gold and Litecoin with a value of at least 144 million US dollars at the time.
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