One of the unfortunately common occurrences within the crypto industry is the hacking of cryptocurrency exchanges and the subsequent stealing of the funds that are stored there. This has happened to small exchanges like Maplecoin as well as some of the biggest ones such as Binance in 2019. Because cryptocurrencies exist in the online space, they are susceptible to theft in a way that is not as easily applied to fiat currency and while cryptocurrency exchanges and crypto users are developing new and improved ways to secure their funds, exchange hacks are still fairly prevalent within the industry.
According to a recent report by Chainalysis, there was an increase in the number of cryptocurrency exchange hocks in the year 2019 but the total amount of money stolen wasn’t declined.
According to the reports, 11 attacks took place in 2019 and the most lucrative was $105 million which was stolen from Coinbene that year. However, there has been a decline in the amount of money typically stolen per hack. In 2019, the average amount of money stolen was $26 million which was a significant drop from the $146 million the previous year. Most of the attacks did not exceed $10 million in terms of profits gained and it is believed that the reduction in the amount of money stolen is due to security advancements from cryptocurrency exchanges.
The money stolen from these hacks usually find their way to other exchanges and then exchanged for fiat currency. At the same time, a number of the tokens are left dormant and this means law enforcement can track them down and so can exchanges. It should be noted that Binance tracked some stolen phones to their exchange and subsequently froze them. In response to these developments, exchanges have become more prudent with their security measures as they store less money in the hot wallets, are more watchful of suspicious withdrawal activity and put more security measures in place for large withdrawals.