Cryptocurrency thefts are on the rise. This is what you should know

Do I invest in cryptocurrencies or not?

5:32

New York (CNN Business) -

Over the summer, an

anonymous

stole roughly $ 600 million in cryptocurrency from the Poly Network, a decentralized financial network that many outside of the crypto world have probably never heard of.

Then the

returned the loot.

Four months later,

stole at least $ 150 million from the Bitmart crypto exchange.

According to an analysis,

unidentified

used a stolen private key to open two storage wallets (called "hot wallets" in English) and extract funds.

Hackers steal over $ 600 million in crypto 1:00

Security incidents of this type are not new to the world of cryptocurrencies, but the scope of these

appears to grow as

prices soared in the last year, attracting more public attention.

Five of the 10 largest crypto thefts on record occurred this year, according to data collected by consumer website Comparitech.

And these incidents may continue due to increased use of cryptocurrencies, according to fintech experts.

Here we leave you what you should know about what happens and how to keep your digital assets safe.

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What is happening with cryptocurrency thefts?

The two main targets of

are currently on centralized exchanges and decentralized financial services (DeFi), according to Tom Robinson, chief scientist at Elliptic, a London-based crypto firm.

Centralized exchanges were the main target of

groups

for several years.

These exchanges store users' assets in storage wallets (so-called "hot wallets)", or digital wallets that are connected to the internet.

This makes them more accessible to users, but also potentially more vulnerable to

cunning

.

The recent

BitMart

was one such example.

Another is the attack on Coincheck in 2018, in which approximately $ 530 million was stolen.

Which made it the largest cryptocurrency fraud in history, until this year's Poly Network incident, according to Comparitech data.

• A group of cryptocurrency investors tried to buy an old copy of the United States Constitution.

  It didn't work

DeFi services are a newer part of the world of cryptocurrencies.

DeFi software applications completely eliminate exchanges as they run directly on top of blockchain platforms, and

of these services are often due to coding errors or problems with the application design, according to Robinson.

Prime examples include the Poly Network and the most recent hack of Badger DAO, a platform that offers users vaults to store bitcoins and make a profit.

The

Badger DAO

resulted in the loss of $ 120 million.

"What is clear from most of the attacks this year is that it is often a vulnerability that is being exploited," said Rebecca Moody, head of research at Comparitech.

"With an exponentially growing industry reliant on open source technology, this leaves platforms vulnerable to exploitation when hackers are able to find a weakness in the code."

Do I invest in cryptocurrencies or not?

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What are you at risk of really losing?

Just because an exchange is

doesn't necessarily mean you lose all your money.

Each cryptocurrency service has different levels of resources to cover these attacks.

BitMart, for example, agrees to answer for all stolen assets.

According to TRM Labs cryptocrime analyst Joe McGill, if an entity does not have the ability to compensate affected users, there is still a chance that law enforcement agencies, such as the IRS's Cyber ​​Criminal Investigations Unit, could recover the assets. stolen funds.

But there is no guarantee.

While many banks typically offer deposit insurance up to a certain amount, there is no such promise when handling cryptocurrencies on a third-party service.

Some companies may carry insurance to cover losses, but the level of coverage (if any) varies by platform.

As for the stolen cryptocurrencies, they could be gone forever.

"Most of the time,

get away with stolen funds as the cryptocurrency is virtually untraceable and can be easily disguised by laundering through wallets in a matter of minutes," explained Adam Morris, co-founder. from Crypto Head, to CNN Business.

How can cryptocurrency owners protect themselves?

When using a wallet or cryptocurrency exchange, experts say that users should examine the scale and professionalism of the company behind it.

"Do you have people responsible for cybersecurity? Does the company have a good track record? What is the size of the company? How many employees does it have? These are all indicators that allow you to trust that that company is going to protect your assets responsibly. "says Robinson.

There are also basic security measures that users can implement when accessing their cryptocurrency account.

McGill recommends two-step authentication or hardware keys, which are basically passwords stored on offline devices.

He also recommends requiring approval of all cryptocurrency withdrawals, as well as creating an address whitelist, which only allows certain addresses on your contact list to receive these types of funds from your account.

"There is no 100% guarantee of avoiding cybercrime," McGill cautions, but said it is important to understand the exchanges that are used, their history with cybercrime, and the response systems in place.

Another way to protect your own cryptocurrencies, according to Morris, is to use a hardware wallet, known as a "cold wallet," rather than storing them with a service.

Although it is considered the safest method to save cryptocurrencies, this way places all the responsibility on the user to save the private keys.

If those keys are lost or stolen, there is no major financial institution offering support.

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