We have been covering security around cryptocurrencies since this new form of digital payments began to gain popularity. There were always concerns around the safety of these digital assets, and the recent bust by the Department of Justice does no favors for consumer faith in crypto, NFTs, and the emerging Metaverse.
The industry still has a way to go in creating an environment where investors on Main Street feel comfortable parking their money in these assets – and the headlines of theft to the tune of billions only highlight how critical this need is.
Criminals will always look for vulnerabilities they can exploit, and the rest of us must perpetually evolve to thwart them. With the Wild West of crypto and NFTs, as well as the popularity of the Metaverse, we will see further challenges in securing these areas. Criminals are not tied to any geographic location when looking to steal assets, so we have to think about how to guard against hacking in the Metaverse.
The biggest crypto heist of all time
Ilya Lichtenstein and Heather Morgan, dubbed by the Internet as the “Bonnie and Clyde of Crypto,” are charged with attempting to pull off the biggest crypto heist in history. As this New York Times article covers, they have been “Charged with conspiring to launder billions of dollars in Bitcoin, the couple, Ilya Lichtenstein, 34, and Heather Morgan, 31, were accused of siphoning off chunks of the purloined currency and trying to hide it in a complex network of digital wallets and internet personas.” And, “if convicted of that and a second conspiracy count, they could face up to 25 years in prison.”
This couple operated out in the open, attempting to build credibility as thought leaders not only in crypto but, shamelessly, in cybersecurity by contributing articles to Forbes. Heather Morgan made rap videos, had a large online presence, and called herself the “Crocodile of Wall Street.” Her over-the-top online presence (a bit cringe-worthy) was known as Razzlekahn, in which she rapped about cryptocurrencies (take a peek here).
The risks involved
Online purchases may put you at some risk. While tech giants such as Amazon and PayPal have built extremely safe platforms for e-commerce transactions, the crypto exchanges have been the target of hackers.
As this CNN report covers: “The two main targets of crypto hacks currently are centralized exchanges and decentralized finance (DeFi) services, according to Tom Robinson, chief scientist at London-based crypto compliance firm Elliptic.”
The crypto exchanges have been at risk for years, as they have been popular destinations for people buying and selling cryptocurrencies. A newer vulnerability has been the DeFi services, as they help customers buy crypto directly.
Further proof that the sums being stolen are only getting larger is covered in this piece: “The recent BitMart hack was one such example. Another is the Coincheck attack in 2018, which saw roughly $530 million stolen, making it the biggest crypto heist ever — until the Poly Network incident this year, according to Comparitech’s data.” As more money exchanges hands online, and more ways to enable those transfers proliferate, the hackings will continue.
Law enforcement strikes back
This has not only been the largest recovery of stolen crypto, but the largest recovery of any kind of stolen currency in the DOJ’s history. Previously, in dark corners of the internet like the Silk Road, cyber thieves roamed free, but agencies now have tools to catch these sophisticated criminals.
As this Bloomberg article states on the DOJ’s progress, and understanding where digital assets meet old school money laundering: “Today’s arrests, and the Department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” Deputy Attorney General Lisa Monaco said in a statement. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions.”
What can we do to protect ourselves? People will buy digital assets as they become more mainstream. And while safety precautions have improved, some platforms are safer than others. As an example, platforms such as Venmo (owned by PayPal) offer the ability to purchase cryptocurrencies, and some exchanges such as Coinbase have a good reputation for safety.
Digital assets are not going away, and we need to learn how to best protect ourselves when buying and selling them, as well as understanding it is still not 100% safe out there.