Cryptocurrency and security
Cryptocurrency and security, describes attempts to obtain digital currencies by illegal means, for instance through phishing, scamming, or hacking, or the measures to prevent unauthorized cryptocurrency transactions, and storage technologies.
General[edit | edit source]
Cryptocurrency security technologies[edit | edit source]
There are various types of cryptocurrency wallets available, with different layers of security, including devices, software for different operating systems or browsers, and offline wallets.
Notable theft[edit | edit source]
Exchanges[edit | edit source]
Notable cryptrocurrency exchange hacks, resulting in the theft of cryptocurrencies include:
- Bitstamp In 2015 cryptocurrencies worth $5 million were stolen
- Mt. Gox Between 2011 and 2014, $350 million worth of bitcoin were stolen
- Bitfinex hack In 2016, $72 million were stolen through exploiting the exchange wallet, users were refunded.
- NiceHash In 2017 more than $60 million worth of cryptocurrency was stolen.
- Coincheck NEM tokens worth $400 million were stolen in 2018
Currencies[edit | edit source]
In 2016, known as the DAO event, an exploit in the original Ethereum smart contracts resulted in multiple transactions, creating additional $50 million. Subsequently the currency was forked into Ethereum Classic, and Ethereum, with the latter continuing with the new blockchain without the exploited transactions.
In 2017, Tether announced they were hacked, losing $31 million in USTD from their primary wallet. The company has 'tagged' the stolen currency, hoping to 'lock' them in the hacker's wallet (making them unspendable).
Bitcoin[edit | edit source]
There have been many cases of bitcoin theft. One way this is accomplished involves a third party accessing the private key to a victim's bitcoin address, or of an online wallet. If the private key is stolen, all the bitcoins from the compromised address can be transferred. In that case, the network does not have any provisions to identify the thief, block further transactions of those stolen bitcoins, or return them to the legitimate owner.
Theft also occurs at sites where bitcoins are used to purchase illicit goods. In late November 2013, an estimated $100 million in bitcoins were allegedly stolen from the online illicit goods marketplace Sheep Marketplace, which immediately closed. Users tracked the coins as they were processed and converted to cash, but no funds were recovered and no culprits identified. A different black market, Silk Road 2, stated that during a February 2014 hack, bitcoins valued at $2.7 million were taken from escrow accounts.
Sites where users exchange bitcoins for cash or store them in "wallets" are also targets for theft. Inputs.io, an Australian wallet service, was hacked twice in October 2013 and lost more than $1 million in bitcoins. In late February 2014 Mt. Gox, one of the largest virtual currency exchanges, filed for bankruptcy in Tokyo amid reports that bitcoins worth $350 million had been stolen. Flexcoin, a bitcoin storage specialist based in Alberta, Canada, shut down on March 2014 after saying it discovered a theft of about $650,000 in bitcoins. Poloniex, a digital currency exchange, reported on March 2014 that it lost bitcoins valued at around $50,000. In January 2015 UK-based bitstamp, the third busiest bitcoin exchange globally, was hacked and $5 million in bitcoins were stolen. February 2015 saw a Chinese exchange named BTER lose bitcoins worth nearly $2 million to hackers.
A major bitcoin exchange, Bitfinex, was hacked and nearly 120,000 bitcoins (around $60M) was stolen in 2016. Bitfinex was forced to suspend its trading. The theft is the second largest bitcoin heist ever, dwarfed only by Mt. Gox theft in 2014. According to Forbes, "All of Bitfinex's customers,... will stand to lose money. The company has announced a cut of 36.067% across the board." Following the Bitfinex hack the company refunded customers.
Thefts have raised safety concerns. Charles Hayter, founder of digital currency comparison website CryptoCompare said, "It's a reminder of the fragility of the infrastructure in such a nascent industry." According to the hearing of U.S. House of Representatives Committee on Small Business in April 2, 2014, "these vendors lack regulatory oversight, minimum capital standards and don't provide consumer protection against loss or theft."
Wallets[edit | edit source]
In 2017, a flaw in the Parity Wallet, caused the lose of approximately $30 million.
Fraud[edit | edit source]
Homero Josh Garza, who founded the cryptocurrency startups GAW Miners and ZenMiner in 2014, acknowledged in a plea agreement that the companies were part of a pyramid scheme, and pleaded guilty to wire fraud in 2015. The U.S. Securities and Exchange Commission separately brought a civil enforcement action against Garza, who was eventually ordered to pay a judgment of $9.1 million plus $700,000 in interest. The SEC's complaint stated that Garza, through his companies, had fraudulently sold "investment contracts representing shares in the profits they claimed would be generated" from mining.
Following its shut-down, in 2018 a class action lawsuit for $771,000 was filed against the cryptocurrency platform known as BitConnect, including the platform promoting YouTube channels. Prior fraud warnings in regards to BitConnect, and cease-and-desist orders by the Texas State Securities Board cited the promise of massive monthly returns.
Malware[edit | edit source]
Bitcoin[edit | edit source]
Malware stealing[edit | edit source]
Some malware can steal private keys for bitcoin wallets allowing the bitcoins themselves to be stolen. The most common type searches computers for cryptocurrency wallets to upload to a remote server where they can be cracked and their coins stolen. Many of these also log keystrokes to record passwords, often avoiding the need to crack the keys. A different approach detects when a bitcoin address is copied to a clipboard and quickly replaces it with a different address, tricking people into sending bitcoins to the wrong address. This method is effective because bitcoin transactions are irreversible.:57
One virus, spread through the Pony botnet, was reported in February 2014 to have stolen up to $220,000 in cryptocurrencies including bitcoins from 85 wallets. Security company Trustwave, which tracked the malware, reports that its latest version was able to steal 30 types of digital currency.
A type of Mac malware active in August 2013, Bitvanity posed as a vanity wallet address generator and stole addresses and private keys from other bitcoin client software. A different trojan for macOS, called CoinThief was reported in February 2014 to be responsible for multiple bitcoin thefts. The software was hidden in versions of some cryptocurrency apps on Download.com and MacUpdate.
Ransomware[edit | edit source]
Many types of ransomware demand payment in bitcoin. One program called CryptoLocker, typically spread through legitimate-looking email attachments, encrypts the hard drive of an infected computer, then displays a countdown timer and demands a ransom in bitcoin, to decrypt it. Massachusetts police said they paid a 2 bitcoin ransom in November 2013, worth more than $1,300 at the time, to decrypt one of their hard drives. Bitcoin was used as the ransom medium in the WannaCry ransomware. One ransomware variant disables internet access and demands credit card information to restore it, while secretly mining bitcoins.
[edit | edit source]
In June 2011, Symantec warned about the possibility that botnets could mine covertly for bitcoins. Malware used the parallel processing capabilities of GPUs built into many modern video cards. Although the average PC with an integrated graphics processor is virtually useless for bitcoin mining, tens of thousands of PCs laden with mining malware could produce some results.
German police arrested two people in December 2013 who customized existing botnet software to perform bitcoin mining, which police said had been used to mine at least $950,000 worth of bitcoins.
For four days in December 2013 and January 2014, Yahoo! Europe hosted an ad containing bitcoin mining malware that infected an estimated two million computers. The software, called Sefnit, was first detected in mid-2013 and has been bundled with many software packages. Microsoft has been removing the malware through its Microsoft Security Essentials and other security software.
Several reports of employees or students using university or research computers to mine bitcoins have been published.
On February 20, 2014, a member of the Harvard community was stripped of his or her access to the University’s research computing facilities after setting up a “dogecoin” mining operation using a Harvard research network, according to an internal email circulated by Faculty of Arts and Sciences Research Computing officials.
Phishing[edit | edit source]
A phishing website to generate private IOTA wallet seed passphrases, collected wallet keys, with estimates of up to $4 million worth of MIOTA tokens stolen. The malicious website operated for an unknown amount of time, and was discovered in January 2018.
See also[edit | edit source]
References[edit | edit source]
- "Coincheck Hacked: "The Biggest Theft in the History of the World"". cryptonews. January 26, 2018.
- "More than $60 million worth of bitcoin potentially stolen after hack on cryptocurrency site". Archived from the original on 2017-12-12.
- "Coincheck Says It Lost Crypto Coins Valued at About $400 Million". Bloomberg. January 26, 2018.
- Russell, Jon. "Tether, a startup that works with bitcoin exchanges, claims a hacker stole $31M". TechCrunch. Archived from the original on 2017-11-21. Retrieved 2017-11-22.
- "Bitcoin: Bitcoin under pressure". The Economist. 30 November 2013. Retrieved 30 November 2013.
- Jeffries, Adrianne (19 December 2013). "How to steal Bitcoin in three easy steps". The Verge. Retrieved 17 January 2014.
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- "Silk Road 2 loses $2.7m in bitcoins in alleged hack". BBC News. 14 February 2014. Retrieved 15 February 2014.
- Hern, Alex (8 November 2013). "Bitcoin site Inputs.io loses £1m after hackers strike twice". The Guardian. Retrieved 18 September 2015.
- "MtGox bitcoin exchange files for bankruptcy". bbc.com. BBC. 28 February 2014. Retrieved 18 April 2014.
- Ligaya, Armina (5 March 2014). "After Alberta's Flexcoin, Mt. Gox hacked, Bitcoin businesses face sting of free-wheeling ways". Financial Post. Retrieved 7 March 2014.
- Truong, Alice (6 March 2014). "Another Bitcoin exchange, another heist". Fast Company. Retrieved 7 March 2014.
- Zack Whittaker (5 January 2015). "Bitstamp exchange hacked, $5M worth of bitcoin stolen". Zdnet. CBS Interactive. Retrieved 6 January 2015.
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- Cyris Farivar, GAW Miners founder owes nearly $10 million to SEC over Bitcoin fraud Archived 2017-12-29 at the Wayback Machine., Ars Technica (October 5, 2017).
- "Class Action Lawsuit Filed Against BitConnect". January 26, 2018.
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- Zach Miners (24 February 2014). "Bitcoins, other digital currencies stolen in massive 'Pony' botnet attack". Retrieved 8 January 2015.
- Finkle, Jim (24 February 2014). "'Pony' botnet steals bitcoins, digital currencies: Trustwave". Reuters. Retrieved 7 March 2014.
- "Watch out! Mac malware spread disguised as cracked versions of Angry Birds, Pixelmator and other top apps". ESET. 26 February 2014. Retrieved 20 November 2015.
- "You're infected—if you want to see your data again, pay us $300 in Bitcoins". Ars Technica. Retrieved 23 October 2013.
- "Criminals continue to defraud and extort funds from victims using cryptowall ransomware schemes". FBI. Retrieved 13 November 2017.
- "How Ransomware turns your computer into a bitcoin miner". The Guardian. 10 February 2014. Retrieved 7 March 2014.
- Gibbs, Samuel (21 November 2013). "US police force pay bitcoin ransom in Cryptolocker malware scam". The Guardian. Retrieved 7 March 2014.
- Usborne, Simon (15 May 2017). "Digital gold: why hackers love Bitcoin" – via The Guardian.
- Peter Coogan (17 June 2011). "Bitcoin Botnet Mining". Symantec.com. Retrieved 24 January 2012.
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- Hornyack, Tim (6 June 2014). "US researcher banned for mining Bitcoin using university supercomputers". PC world.com. IDG Consumer & SMB. Retrieved 13 June 2014.
- "IOTA Founder On Stolen Funds: Lots of People Will "Screw You Over"". Finance Magnates. January 25, 2018.
- "Online IOTA Seed Generator Starts Stealing Funds From Users". The Merkle. January 22, 2018.