As cryptocurrency exchanges beef up their security to defend themselves against cyberattacks, hackers are responding in kind by amping up their techniques — and the data shows that they’re finding success.
Cryptocurrency exchanges faced more successful attacks in 2019 than in any other year since bitcoin began trading on public exchanges in 2011, according to data compiled for a recent report[1] from blockchain analytics firm Chainalysis. While the 11 attacks recorded in 2019 nearly doubled those conducted in 2018, the total damage ($282.6 million stolen in cryptocurrency in 2019 versus $875.5 million in 2018) was drastically less.
The total amount of funds stolen in both 2014 and 2018 — which each superseded the amount looted in 2019 — were the result of the industry-altering Mt. Gox[2] hack in 2014 and the half-billion dollar Coincheck[3] hack (from which the spoils were mostly in NEM), respectively.
Excluding these two hacks, 2019 was actually the worst year for the total amount of assets seized through hacks or similar attacks, such as phishing. However, the average number of assets stolen per hack decreased last year from 2018. This damage was partly mitigated, Chainalysis points out, by enhanced security measures and more appropriate custody practices; more exchanges, for instance, are storing fewer funds in hot wallets than they did in previous years.
“Only 54% of the hacks we observed in 2019 took in more than $10 million, compared with all hacks in 2018,” Chainalysis’ blog post reads. “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.”
Cryptocurrency Exchange Hackers Improve Tactics
Still, as exchanges improve their defenses, hackers are improving their offensive strategies as well.
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