In June, a Federal Trade Commission (FTC) commissioner made a bold and chilling prediction. The trade watchdog's Bureau of Consumer Protection revealed that consumers had lost more than half a billion dollars to cryptocurrency-related scams during the first two months of the year alone, and would lose more than $3 billion before the year was finally over.
And not surprisingly, it appears that China, the crypto capital of the world, will contribute the lion’s share to that figure. A month ago, Chinese police bust a giant world cup gambling ring with more than $1 billion in crypto. And now there are new reports coming from the country about millions of dollars in crypto stolen in a highly coordinated hacking attack.
The South China Morning Post has reported that Shaanxi police have apprehended three suspects for hacking into computers and stealing about 600 million yuan (US$87 million) worth of cryptocurrencies.
Officers in Xian have said the hacking operation is the highest value cryptocurrency heist recorded in the country so far. And like many crypto thefts, it was a highly organized operation run by professionals who employed sophisticated techniques. Related: Uber Falling Victim to Investors’ Short-Term Thinking
Police commenced investigations in March when a man reported his computer had been hacked and bitcoin and ethereum worth $100 million in yuan stolen. They started monitoring the activities of the three guys who performed multiple transactions to cover their tracks. The three suspects were professional hackers who had studied hacking since their early teens and even worked in top internet firms in the country and used highly complex technologies that made it easy to hide their nefarious activity.
How Hackers Can Steal Your Bitcoin
Minimal regulation has made the world of digital currency a haven for scammers, hackers and thieves.
Although crypto exchanges are the most commonly targeted, hackers are increasingly hitting individual PCs with cases like the latest Chinese hack becoming more common. Here are the three most common threats:
#1 Obtain your password from a storage service
If you use a bitcoin storage service like Coinbase to store your bitcoin, a hacker can break into your email account and then request Coinbase to reset your password. The request is then sent to the compromised email account thus allowing the thief to gain access to your bitcoin account.
To prevent this from happening, lock down your email account using two-factor authentication. You should also do the same with your bitcoin storage service. Coinbase employs a two-factor log-in process consisting of a password and an SMS text. It’s, however, possible for the hackers to intercept texts. It’s therefore advisable to use an app-based verification systems such as Google Authenticator
#2 You Expose Your Private Key
If you store your bitcoin in your own wallet instead of using a service like Coinbase, a thief can obtain your private key by accessing your email. It’s best to store your private key offline on a USB stock or piece of paper and place it in a safe place like a safety deposit box.
#3 Hacker Impersonates Bitcoin Recipient
ICOs frequently request for payment in the form of bitcoin. Clever hackers can impersonate the company holding an ICO complete with fake websites and persuade the sender to send them bitcoin or some other crypto.
Always confirm that a wallet address is genuine before sending any bitcoin.
#4 Exit Scams
Hackers can set up a company offering bitcoin-related services where customers pay via bitcoin. Then all of a sudden the company disappears with the owners sometimes claiming they have been hacked. In reality, they just pulled and exit scam and vanished with clients’ bitcoin.
Exit scams tend to be quite rampant in the dark web. If that is your favorite hangout, be extra careful who you hand over your bitcoin to.
By Alex Kimani for Safehaven.com
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