Top 8 Biggest Bitcoin Hacks in History

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What are the biggest Bitcoin hacks in history? How can you protect your BTC from theft attempts? If these thoughts have ever crossed your mind you may not be exaggerating. Bitcoin hacks have and probably will happen.

Analyzing some of the most disastrous crypto hacks is useful in more than one way. First, it shows that Bitcoin and also other cryptos are not impenetrable and second, it can make us more aware of this reality and if needed, force us to take better security measures to protect our crypto assets.

8 Biggest Bitcoin hacks

Bitcoin hacks don’t affect just their owners, but also businesses, regulators, and exchanges. Even so, there has been considerable progress in the cybersecurity sector, so many threats have been neutralized.

With that said, let’s see what are some of the biggest Bitcoin hacks in history.

$92 Billion boom (2010)

How would you like some BTC out of thin air? Bitcoin might not be doing too well right now, but even with the current price none of us would say no.

However, a hacker made it possible for him back in August 2010. He managed to generate 92 billion Bitcoins from nothing. Even with the current prices he surely would have become the wealthiest person on Earth. The hack exploited a number overflow error and the Bitcointalk thread where members of the Bitcoin community found the problem is still visible.

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In the end, the community managed to cancel all the transactions performed after the hack and revert the blockchain to a state before the hack.

Mt. Gox (2014 and 2011)

Biggest Bitcoin hacks

2014

Mt. Gox is probably the most popular Bitcoin hack. The company had 850,000 BTC vanish in February 2014. They manage to find 200,000 BTC but the rest of 650,000 BTC have never been recovered.

Back then, Mt. Gox had 70% of Bitcoin’s total trading volume and was the largest Bitcoin exchange in the world. Even so, My. Gox filed for bankruptcy three weeks after the hack. At the time, the theft was approximately 7% of the total Bitcoin supply. Later inquiries discovered that the Bitcoin was in fact slowly bled from the exchange from late 2011, since the discovery in February 2014.

Unexpectedly, they actually found the perpetrator. In 2017, Alexander Vinnik was arrested in Greece and accused of being one of the BTC-e operators, the exchange through which most of the Mt. Gox coins were laundered. Almost a year later he was extradited to Russia.

2011

The fact that Mt. Gox was hacked in 2011 hasn’t received as much attention as the 2014 event and many consider it the first sign of what was going to happen three years later.

Someone with access to the exchange got a hold of a computer belonging to one of the company’s auditors. The hacker managed to change the nominal value of Bitcoin to one cent.

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The new value caused a tremendous “ask” order at any price and led to a mass selloff. This hack affected even large accounts holding 6-zero figures. The hacker who made himself rich has remained anonymous and is still at large.

Bitfinex (2016)

Bitfinex is one of the largest crypto exchanges with around two million users. The company was hacked in August 2016 when the thieves stole 120,000 BTC. At the time they were worth $72 million.

The hack relied on Bintfinex’s usage of multi-signature wallets which ironically, were introduced a year before to help secure the users’ coins.

Poor coding was to blame for the most part. In theory, Bitfinex would store two keys, while BitGo would hold one. To verify a transaction, all parties had to independently sign it.

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In practice, BitGo would do exactly whatever Bitfinex did. As a result, the hackers only needed to get into Bitfinex’s servers. After the hack, Bitcoin’s value dropped 20% in the markets.

Bintfinex came up with a clever solution to recover. They took 36% of all customer balances and replaced them with a redeemable BFX token. Over the course of the next eight months, the exchange repurchased the redeemable BFX tokens with funds generated from trading fees, replacing the stolen funds without going out of business.

Bitfloor (2012)

In September 2012, Bitfloor was the fourth largest U.S. exchange and lost 24,000 BTC to a hacker. He managed to access client accounts using backup keys from funds being held in a hot wallet. The exchange was shut down for several days after which they officially stated that all lost funds would be reimbursed. Regardless, that never happened.

In April 2013, the exchange was shut down completely after all their bank accounts got closed.

Bitcoinica (2012)

top cryptocurrency hacks

This hack took place in 2012 and was actually comprised in three smaller heists. The company lost approximately 101,000 BTC.

The first hack happened in March 2012 as the hackers managed to socially engineer access to Linode’s network, a cloud hosting provider. Linode was hosting Bitcoinica’s infrastructure and hackers had stolen 43,000 BTC. There were rumors about the hacker being a Linode employee but that has never been confirmed and the hacker has remained anonymous.

A month later, 38,000 BTC were stolen from another one of Bitcoinica’s server’s this time at Rackspace. After that, Bitcoinica shut down their website but the story wasn’t over.

In July, the company was already in conservatorship and the third strike came down with an additional 40,000 BTC that were stored at Mt. Gox disappearing. While afterward reports indicate the amount was found and returned, this has yet to be confirmed.

NiceHash (2017)

Bitcoin hacks have affected more than exchanges. NiceHash, the popular crypto-mining marketplace based in Slovenia announced they’ve been targeted by hackers in December 2017.

The exact amount stolen remains unknown but a suspected Bitcoin wallet held over 4,700 coins which were worth approximately $62 million at that time.

While most people expected NiceHash to disappear, the company handled things quite well. Soon after the hack, NiceHash announced their customers would get back their funds. The company delivered reimbursements on a regular basis and kept their promise.

Allinvain (2011)

Hackers also targeted individuals, not just companies. Allinvain is a Bitcointalk forum user’s pseudonym who in June 2011, announced in a post that approximately 25,000 BTC were stolen from his computer.

As an early Bitcoin miner, Allinvain and mined the accumulated BTC from 2010 to early 2011. He managed to identify the address where the stolen BTC was transferred but he never recovered any of the funds.

The hack was possible because Allinvain stored his wallet recovery seed in an unencrypted file on a PC that got infected by malware. This story is a classic example of poor cryptocurrency security traded for additional convenience.

From April to July 2011, Bitcoin’s price had one of its earliest surges from $1 to over $30 making Allinvain’s loss quite significant, at least for a single individual.

Bitstamp (2015)

In January 2015, the Bitstamp Exchange got hacked and lost 19,000 BTC. Social engineering was the root cause of the hack.

The hacker repeatedly tried to get in touch with customer service representatives and other Bitstamp employees via email and Skype. He posed as press staff and other industry members attempting to lure them into opening a malware infected file.

Ultimately, he succeeded and once an employee opened the malicious file, the hacker was able to access the Bitstamp network via the infected machine. As a result, 19,000 BTC were siphoned from a hot wallet stored on Bitstamp’s servers.

Nevertheless, customers were not affected by the hack and Bitstamp is still in business having an established reputation among the top Bitcoin exchanges.

At the time of the hack, the U.K. police declared they have a solid lead to the attacker’s identity but they were never able to act on it as the hacker was not physically present in the U.K.