The world of cryptocurrencies is not immune to the shadows that come with living in a time when digital currencies are having such a significant impact on the global financial landscape.
Malicious actors are devising complex plans to take advantage of this expanding market while remaining unseen and hidden in the shadows of the internet. Even if the situation involving the most recent Euler Finance exploit and the Ronin Network hack last year was frightening, it is not an isolated incident.
The finding of a potential link between these instances has caused concern among those in the cryptocurrency community regarding the security and traceability of digital assets.
The Ronin Bridge exploiter, who is thought to be connected to the notorious North Korean hacker group Lazarus Group, received 100 Ether, or $170,515, via a wallet address connected to the Euler Finance exploit. These occurrences serve as a sharp reminder of the cyberthreats that exist within the crypto sector and may jeopardise its integrity and safety.
However, this cloud does have a silver lining. The discovery of these links further demonstrates the effectiveness of blockchain technology in locating and perhaps even reducing these concerns. As we continue reading this article, we'll examine the intricacies of cryptocurrency hacking and talk about how to effectively counter such malicious threats.
How does crypto hacking work?
Crypto hacking, in its most basic form, is the unauthoritative access to and theft of digital assets kept in cryptocurrency wallets and exchanges. It is a type of cybercrime that targets the blockchain ecosystem specifically and takes advantage of flaws in hardware, software, or user behaviour to gain cryptocurrencies in an unauthorised manner.
Crypto hackers use a variety of strategies. One of the most typical is phishing, where a hacker impersonates a reliable entity to deceive people into disclosing sensitive information like private keys or login passwords. The use of malware or ransomware, which infiltrates networks and either directly steals cryptoassets or holds them for ransom, is a further popular tactic.
However, these aren't the only techniques available for crypto cracking. Since hot wallets on crypto exchanges are more prone to attack than cold wallets, hackers target them.
This includes the current scandals surrounding the Ronin Network and Euler Finance. They depict what are referred to be DeFi exploits. DeFi platforms, like Euler Finance, run on smart contracts, which are self-executing contracts with the conditions of the agreement put directly into code. These smart contracts have numerous benefits, such as transparency and a reduction in the need for middlemen, but they may also have flaws or other weaknesses that cunning hackers might take advantage of.
Rise in crypto crimes
In 2022, Chainalysis recorded bitcoin thefts of $3.8 billion, a startling increase from the $0.5 billion taken in 2020 and a 15% increase over the $3.3 billion reported in 2021. The increase in online holdings brought about by the rise in public use of digital currencies has made them more desirable and reachable targets for cybercriminals.
De-Fi protocols, essential pieces of technology that support major cryptocurrency exchanges and organisations, were identified by Chainalysis as the key target of assaults in both 2023 and 2022. De-Fi protocols accounted for 82% of all hacking instances in 2022, an increase from 73% in the previous year.
North Korea continues to lead the pack in terms of dedication to bitcoin hacking. Chainalysis estimates that NK-connected cybercrime groups, such the Lazarus Group, stole $1.7 billion in 2022, making up about half of the annual global total. In 2022, NK stole more digital currency than ever before, according to a recent United Nations report on cyberattacks, albeit the value of the stolen assets vary.
According to The Conversation, North Korea uses the stolen cryptocurrency to fund its sanctioned nuclear programme, indicating that its hacking activities are unlikely to slow down anytime soon. Compared to prior years, 2022 will see a significant increase in hacking activity, according to Chainalysis' year-over-year research.
Prevention tips
The increase in crypto hacking events and the daring actions of organisations like the Lazarus Group highlight the pressing need for strong deterrents. A multifaceted strategy combining technological, legal, and instructional tactics is necessary to tackle these dangers.
Technology-based barriers: The first line of defence against advanced persistent threats is strong cybersecurity measures. This entails the deployment of firewalls, secure, up-to-date software, and robust encryption for all data transmissions. MFA, or multi-factor authentication, can offer an additional layer of security to prevent unauthorised access.
Regular smart contract audits by outside security companies can aid in identifying and fixing vulnerabilities in the DeFi space before they are exploited. Additionally, the usage of bug bounty programmes, in which ethical hackers are compensated for identifying and disclosing software vulnerabilities, might be an efficient tactic to foreseeably discover possible security weaknesses.
Legal obstacles: Another important component of stopping crypto hacking is using legal disincentives. This entails the creation and application of stringent legislation and rules to deter online criminal activity. The decentralised and international character of cryptocurrencies, however, can make enforcing laws more difficult.
Despite these difficulties, there have been cases where hackers have been caught and charged, including the notorious Silk Road case, illustrating the effectiveness of legal deterrents. Blockchain forensics and international cooperation between law enforcement organisations can be crucial in locating and prosecuting these fraudsters.
Educational barriers: Education is also a potent deterrent. In cybersecurity, the human element is frequently the weakest link since people are readily duped into disclosing private information or acting riskily. Therefore, educating people on how to protect their digital assets, spreading awareness of safe online conduct, and encouraging these behaviours are essential steps in preventing crypto hacking.
Cybercrime is still a significant concern as we negotiate the complicated world of cryptocurrency. Axie Infinity's Ronin Network and the hacker group Lazarus' suspected involvement in such breaches serve as a sobering warning of the vulnerability of digital assets. Although law enforcement authorities and cybersecurity companies are stepping up their efforts to prevent and track down these hackers, the reality is that due to the anonymity and decentralised nature of cryptocurrencies, these efforts are made more difficult.
Though it is still in its infancy, insurance is beginning to show promise as a way to reduce the risk of loss from cybercrimes. Crypto insurance may provide some amount of defence against losses brought on by theft, hacking, and other cybersecurity breaches. However, it is a challenging task due to the volatile nature of crypto assets and the absence of comprehensive rules.
In the end, protecting digital assets depends on personal watchfulness, technological breakthroughs, legal frameworks, and international cooperation. The necessity for effective legal deterrents and strong cybersecurity safeguards will only become more pressing as we continue to learn more about cryptocurrency. In this fast-changing environment, the development of crypto insurance and other preventive measures will surely play a crucial role.
