According to a recent Financial Times article, the amount of crypto sent to addresses with known criminal associations shot to a record $14 billion in 2021, more than doubling from 2020. This is according to research from data company Chainalysis. Scams, ransomware and theft rose 79% in dollar terms last year. This is perhaps unsurprising when you look at our aggregator table below of the notable scams, hacks and thefts of 2021.
The key takeaways from last year’s hacks and scams can be distilled down to the following:
- Hot wallets are hackable. Hackers stole the private keys from hot wallets of many different crypto exchanges last year. Each exchange did typically admit to the hack and that they were limited to hot wallets;
- Cold wallets are not hackable while being offline (unless of course, the private key is written down somewhere that is accessible). Cold wallets keep private keys from being accessible by hackers by not being connected to the internet. However, to place a cryptocurrency transaction each user must connect to the internet. Once connected, the cold wallet may then become vulnerable to attack;
- Cryptocurrency exchanges may be a weak link in the cryptocurrency transaction process. Hackers have specifically targeted exchanges due to their facilitation of crypto transactions. Hackers typically either gained control of exchanges themselves or the hot wallets and private keys held by the exchanges. Until security of the exchanges increases, this will continue…
