Crypto hackers getting ‘more sophisticated’ as exchanges amp up security

Getting your Trinity Audio player ready...

Crypto hackers are only becoming more sophisticated, with a greater number of hacks in 2019 than ever before, according to data published this week.

In an extract from the 2020 Crypto Crime Report posted to their blog, blockchain analysis firm Chainalysis said the number of successful attacks had nearly doubled in 2019, despite efforts by exchanges to strengthen their security measures.

However, while the number of attacks has shown a stark increase, hackers were unable to hit the heights of previous years in terms of the amount stolen from exchanges.

“2019 saw more cryptocurrency hacks than any other year. But of the 11 attacks that occurred this year, none of them came close to matching the scale of major heists such as last year’s $534 million Coincheck hack, or the $473 million Mt. Gox hack in 2014. Therefore, the total amount stolen from exchanges dropped sharply to $283 million worth of cryptocurrency despite the increased number of attacks,” according to the report.

The biggest attack recorded in the year was the Coinbene hack, which the exchange initially denied had taken place. However, Chainalysis was able to identify the theft from blockchain records, showing hackers successfully syphoning $105 million from the exchange.

The report says the figures demonstrate that exchanges have been able to develop mechanisms to limit the damage caused by hacks, despite the increase in the number of attacks.

“With no hacks taking in more than the $105 million stolen from Coinbene, both the average and median amount stolen per hack fell substantially in 2019, after having risen each of the three preceding years. Only 54% of the hacks we observed in 2019 took in more than $10 million, compared with all hacks in 2018. While the increase in the number of individual hacks should be concerning, the data indicates that exchanges have gotten better at limiting the damage any one hacker can do.”

The majority of the funds stolen from exchanges are immediately transferred to other exchanges, where they can be liquidated to cash. However, the report shows that a sizable proportion of stolen crypto remains unspent in exchange accounts, which could offer some hope of recovery from law enforcement.

The data underlines that while exchanges are definitely strengthening their defenses, the rate of attacks looks likely to continue to increase in 2020.