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Coincheck Hack – One of the Biggest Crypto Hacks in History

Crypto Project Auditing Company

By cyphershieldtechPublished about a year ago 4 min read
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One of the largest crypto hacks, the Coincheck hack, ended up incurring a $523 million loss. Read more to find out how the exchange failed to secure its users' funds.

The common notion around cryptocurrency that sets it apart from the traditional banking system is its transparency, security, and decentralized nature. Users who engage in crypto are assured that their assets will remain safe in their wallets.

However, there have been some attacks in the past that have made people skeptical about trusting cryptocurrency exchanges and storage. For example, Coincheck Hack in 2018. Coincheck hack is considered to be one of the biggest crypto hacks ever. Inspectors sent $523 million worth of NEM (XEM) coins to another address.

When did it happen and who was involved?

Unknown hackers in Japan hacked into the Coincheck cryptocurrency exchange on January 26, 2018. The identities of the hackers who breached the security system are still unknown. The authorities carried out a detailed investigation, but were unable to retract the lost assets or the identities of those hackers.

Post mortem del hack

Approximately $500 million in assets were lost. Coincheck claimed at the time that they were making the best efforts to recover the lost assets. However, after the investigation was carried out, Coincheck admitted that hackers were able to break into its system due to the shortage of employees at the time. Due to inadequate security measures in place, the hackers were able to successfully execute their mission.

Coincheck did not realize that its system was hacked until after a few hours. The exchange later used its capital to reimburse the losses of its 260,000 clients. And because of that, Coincheck is on the rise again by improving its security practices. The refund took some time, but everyone was refunded the exact amount they had lost during the hack.

The consequences of hacking

Although this hack shook Coincheck to its core, it also made many crypto exchanges realize that they need to fill their security gaps to ensure that their clients' assets remain safe even if there is a security breach involved in the future. .

Similarly, Coincheck set a great example by being able to offset their clients' losses. It was seen as a power move by his customers and potential customers.

This is why Coincheck is now considered one of the most active platforms on the internet today.

Impact on the cryptographic community

The crypto community was rocked by the Coincheck hack as it was considered one of the biggest crypto hacks up to 2018. The breach made users and companies insecure about their unwavering trust in the security protocols of crypto projects and the block chains. Similarly, it also alerted other crypto exchanges to work on their security protocols to protect their assets from similar attacks.

However, people did not stop investing in cryptocurrencies after this attack. There has been a steady increase in crypto-related investment around the world. Many companies now accept it as a payment gateway.

These security breaches have also made people think of more ways to make sure hackers don't attack these platforms. These security measures include facial ID verification, biometric passcodes, and two-way authentication methods.

However, it can be assumed that the benefits of cryptocurrencies outweigh these few tricks. Especially when clients don't have the short end of the stick: In most cases, crypto exchanges refunded client funds.

Other crypto hacks worth mentioning

In addition to Coincheck, the cryptocurrency industry has been through a series of attacks. The last one is the Poly Network hack where around 160 million in assets were lost. Poly Network uses lockboxes to protect assets, and they are only released after receiving permission from an authorized network.

However, the hackers were able to release the assets without having to provide authorized permission from another blockchain. On the plus side, they couldn't steal the full amount. After an agreement, they kept around 2 million dollars and the rest (600 million dollars) was returned to the Polynetwork.

After some time, the Poly Network administration reimbursed users for their losses. Since most of the loss was retracted, people are still involved in the project. Some other popular hacks include the BitGrail Hack, Mt. Gox Hack, KuCoin Hack, CryptoCore/Lazarus Hack, Afcrypt Hack, and Bitfinex Hack.

How to protect exchanges from hackers in the future?

These hacks can be avoided by putting certain security controls in place by companies or cryptocurrency users. Regarding how hackers try to learn new techniques, companies can formulate new methods to ensure that no one can hack into your system. Even if, due to technical flaws, hackers manage to infiltrate the system, the assets (coins) should not be released despite their various attempts.

Similarly, users can take security measures to keep their assets safe by using cold wallets instead of active wallets. A cold wallet is an offline storage system for crypto currencies that cannot be hacked.

Users must not share their private keys with anyone and store them in a safe place. In addition to this, it is vital to use a trustworthy and trustworthy crypto exchange. Also, you can use a VPN service while accessing your wallet to keep your transactions untraceable.

To sum it all up

Cryptocurrency is considered to be more secure than the traditional banking system. This is the reason why so many people are drawn to it early on. However, there have been many crypto hacks and scams that have raised concerns about the security offered by cryptocurrency exchanges.

For example, the Coincheck hack in 2018 and the recent Poly Network hack in 2019. However, the advantages of investing in cryptocurrency outweigh the disadvantages.

Crypto projects have great value for the rapidly growing blockchain world. However, your focus should be on the safety and security of your project. Find out all the pitfalls before launching in the market. To that end, a crypto project audit can identify flaws in your project. Our company Cyphershield, thoroughly investigates the crypto project smart contract, including bugs, inefficiency, and vulnerabilities.

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