Everything You Need To Know About The Rise Of Crypto Heists
What’s clear from the majority of these attacks this year is that it’s often a vulnerability in the code that’s being exploited. With the industry growing at an exponential rate and relying on open source technology, this leaves platforms open to exploitation when hackers are able to find a weakness in the code.
One thing users should be aware of when using an exchange is whether or not they have sufficient resources to cover any potential losses. Each crypto service has varying levels of resources to compensate impacted users if needed. BitMart, for example, pledges to cover all stolen assets while another company might have insurance to cover losses but only up to an extent depending on their level of coverage or lack thereof.
The cryptocurrency that’s stolen could be gone forever as well. More often than not, hackers successfully get away with stolen funds as cryptocurrency is virtually untraceable and easily disguised by laundering it through wallets in a matter of minutes, according to Forbes.
The chance that law enforcement — like the IRS Criminal Investigations Cyber Unit — is able to recover the stolen funds is not guaranteed. While many banks typically offer deposit insurance up to a certain amount, there is no such promise when holding crypto assets in a third-party service. Some companies might have insurance to cover losses, but the level of coverage — if there is any at all — varies by platform. As for the cryptocurrency that’s stolen, it could be gone forever unless authorities are able to seize or freeze it within an exchange where it can be easily laundered.
It’s also important for users to be aware of the exchanges they’re using and their history with cybercrime. Some exchanges have a better track record than others when it comes to preventing and mitigating hacks. For example, Coinbase has been praised for its quick response time to security incidents and robust security features while Bitfinex has been criticized for being lax with security measures in the past, according to CSO Online.
It’s also important to understand the company’s compensation plan in the event of a hack. Some platforms, like BitMart, pledge to cover all stolen assets while others might only have insurance up to a certain amount.
User should also scrutinize the scale and professionalism of the company behind the crypto wallet or exchange. This can be done by looking at the company’s website, online community and other sources to get an idea of what type of service users are signing up for.