As 2019 ushers in the Cryptopia breach, the new year’s first crypto exchange hack, a look at 2018 shows $864 million worth of crypto was stolen from exchanges last year.
Trading has been suspended on Cryptopia, a small New Zealand-based exchange, in the wake of the company’s announcement on Tuesday that it was hacked.
The developing story is largely being tracked through social media. Funds that were allegedly stolen from Cryptopia were consolidated and redistributed to Binance and other exchanges. Binance CEO Changpeng Zhao has frozen the funds in question, calling the hacker’s maneuver “high risk” with the ERC20 transactions clearly visible on the Ethereum blockchain.
Just checked, we were able to freeze some of the funds. I don't understand why the hackers keep sending to Binance. Social media will be pretty fast to report it, and we will freeze it. It's a high risk maneuver for them. https://t.co/i0PeahLzic
— CZ Binance (@cz_binance) January 16, 2019
The Cryptopia hack follows several hacks in 2018, which recorded more than double the amount of funds reported stolen in 2017.
Crypto hardware wallet maker Ledger conducted research that found $864 million worth of crypto was stolen from exchanges in 2018, as a result of 10 big crypto exchange hacks.
2018 Timeline of Major Exchange Hacks
- Zaif – $60 million
- Bithumb – $31.5 million
- Coinrail – $40 million
- Coinsecure – $3.3 million
- BitGrail – $195 million (suspected mismanagement of customer funds by BitGrail founder)
- Coincheck – $534.8 million
Source: Ledger Timeline
Says Eric Larchevêque, CEO of Ledger,
“2018 was a record year for exchange hacks, with over $856 million worth of crypto stolen from exchanges according to research conducted at Ledger. Hackers are getting more sophisticated every day, and the Cryptopia hack is evidence that this trend will continue into 2019. Its critical that consumers use these hacks as learning opportunities and proactively protect themselves by taking direct control of their assets.”
Jesse Powell, CEO of crypto exchange Kraken, tweeted on Tuesday that crypto traders should limit the amount of crypto they keep on exchanges due to the risk of hacks.
PLEASE do not store more coins on an exchange (including @krakenfx) than you need to actively trade. Use @LedgerHQ or @Trezor. DEXes are not a panacea — look at The DAO. Open source just means exploits will be discovered sooner (probably not by good guys). ? https://t.co/LmzhtCjpM0
— Jesse Powell (@jespow) January 16, 2019
The thread includes a response from CZ Binance who has widely touted the safety and security of customer funds on Binance.
However, he says traders should use multiple options to secure their crypto, depending on personal preferences. He also supports a shift to decentralized exchanges, such as Binance DEX which is being engineered to eliminate a single point of failure. As a community-driven decentralized exchange, it’s expected to help the crypto ecosystem move beyond the ongoing hacks.
“Store coins yourself. You fight hackers yourself, and guard from losing wallet yourself. Computer breaks, USBs gets lost. Store on an exchange. Only use the most reputable, proven secure, exchanges. Or move to DEX, disrupt ourselves.”
“Some people seems to misread this tweet. It lists 3 options. It does not say which option is better than another, as that depends on each persons security skill, preference, fund allocation, etc. Most importantly, it is an ad for the
#BinanceDEX. My bad for not making it clear.”
According to a recent announcement, Binance expects to launch its DEX in 2019, allowing traders to issue and exchange digital assets without having to trust a third party through deposits on a centralized exchange.