
Notorious Cryptocurrency Heists: The Continuing Threat of Digital Coin Security Breaches
Hacking remains a persistent obstacle to the widespread acceptance of digital assets. Remarkable thefts on various cryptocurrency exchanges and platforms have discouraged potential investors from engaging with them.
Although the blockchain’s security is often emphasized, persistent attacks have shown that this assurance is only partially valid. According to Chainalysis, 2023 witnessed a theft of over $1.7 billion in cryptocurrencies, a slight decline from the $3.8 billion recorded in 2022. Below is an overview of some of the most significant crypto breaches thus far.
Cryptocurrency exchanges are a primary aim for cybercriminals, attracting over $1.7 billion in stolen assets in 2023 alone, following the $3.8 billion theft in 2022. Initially, Mt. Gox was the first major exchange to fall victim to a hack, losing 7% of all bitcoins back then. Hackers also frequently target decentralized finance (DeFi) applications and smart contracts. Long-term investors must adhere to essential safety guidelines, such as storing cryptocurrencies offline when not trading and avoiding custodial accounts unless they offer insurance.
The Sky Mavis Breach
In March 2022, the most substantial cryptocurrency breach targeted the network backing a popular gaming ecosystem. Authorities linked the heist to the Lazarus Group, a North Korean state-sponsored hacking collective. Sky Mavis, the developer behind Axie Infinity, managed to recover $5.7 million a month later, yet it remains the largest crypto hack in history.
A single hacker exploited a weakness in the Poly Network platform in August 2021, absconding with over $600 million. Developers appealed on X (formerly Twitter) for the return of the funds, including $33 million in Tether. After establishing several addresses for transferring back the stolen assets, the hacker began cooperating, and within two days, approximately $300 million was recovered.
Binance and Coincheck Incidents
One of the most high-profile crypto breaches occurred in October 2022 on the Binance exchange, resulting in a $570 million loss. The exploitation of the BSC Token Hub cross-chain bridge allowed hackers to create and withdraw two million additional Binance Coins, emphasizing the need for enhanced blockchain security.
In January 2018, Coincheck was the victim of a $523 million NEM coin theft, valued then at approximately $534 million. The security lapse was due to a hot wallet, which is less secure than an offline cold storage wallet. The Coincheck hack surpassed the notorious Mt. Gox hack at that time, and the NEM Foundation’s president described it as one of the largest in history.
Despite the hack, Coincheck continued its operations and was acquired by Monex Group, a Japanese financial services entity, a few months later.
The Fall of FTX
FTX, once a prominent entity in the crypto sector, filed for Chapter 11 bankruptcy in November 2022. On the same day, over $477 million vanished from its crypto wallets, leaving many account holders with zero balances in both FTX.com and FTX US wallets.
The exchange verified the breach on its Telegram channel. At its peak, the exchange managed close to 70% of all Bitcoin transactions, losing 25,000 bitcoins worth about $400,000.
In 2014, Mt. Gox faced another hit, losing nearly 650,000 customer bitcoins and 100,000 of its own. This amounted to 7% of all bitcoins at the time and was valued at about $473 million. Initially unclear, it was later revealed the coins were stolen from the company’s hot wallet.
Recent Hacks and Emerging Threats
February 2022 saw a $325 million theft from a decentralized finance platform due to an undeployed GitHub repository update. After failing to recover the funds, the popular cryptocurrency bridge had to cover the project’s financial loss. It marked the largest theft involving Solana, which competes with Ethereum in DeFi and NFTs. Up to $47 million was stolen in SOL tokens.
In May 2024, the Japanese DMM Bitcoin exchange suffered a theft of 4,500 BTC, valued at approximately $305 million. Although details remain elusive, suspicions again fall on the Lazarus Group.
The Mixin Network, a cross-chain platform facilitating cryptocurrency transfers, fell victim to a hack in September 2023. Thieves exploited the cloud service provider’s database, making off with about $200 million worth of BTC, ETH, and USDT.
Other Notable Heists
Euler Finance, based on the Ethereum blockchain, was targeted in March 2023 via a flash loan attack, resulting in a $197 million loss in wBTC, DAI, stETH, and USDC. In a surprising turn, the hacker(s) started returning the funds over several days, citing safety concerns.
December 2021 saw the Bitmart centralized exchange lose $196 million. A security analysis firm detected unusual activity as BitMart addresses were drained. Around $100 million were funneled through Ethereum and another $96 million through Binance Smart Chain, with all tokens transferred to the “BitMart Hacker” address on Etherscan.
A month before the Wintermute compromise, Nomad Bridge was attacked, draining $190 million. Known for facilitating token swaps across blockchains, such bridges are favorites due to their asset value and complex smart code. Nomad Bridge managed to retrieve $37 million of the stolen funds.
Wintermute, a leading crypto market maker, was hacked in September 2022, losing roughly $160 million. Owing $200 million to other parties, Wintermute’s CEO offered a 10% bounty for the funds’ return.
Multichain, envisioned as a cross-chain router protocol to enable blockchain communication, was dealt a blow when its CEO, Zhaojun, disappeared after an arrest in China. This led to speculation that the incident was a rug pull—an exit scam with the development team absconding with funds.
Since the mid-2010s, the cryptocurrency industry’s rapid expansion has unveiled vulnerabilities that hackers exploit.
Ongoing security breaches have shaken investors’ trust in the crypto sector. For greater resilience, developers and companies must adopt stricter security measures for blockchain ecosystems.
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