With barely a month down, the line and cryptocurrency exchanges have begun closing shops, a popular trend seen in 2020. In “the tragedy of the cryptocurrencies,” numerous cryptocurrency exchanges have been forced to shut down operations following their system attacks. The attacks have reportedly led to the loss of millions worth of cryptocurrencies and client personal data.
Earlier this week, Livecoin becomes the latest addition to the long list of closed exchanges. Livecoin, a Russian based cryptocurrency exchange, was allegedly hacked last year in December.
While making the announcement, Livecoin explained that the closure was a “hard decision to close the business.” The exchange explained:
“Our service and team bear hard losses as well as our clients.”
Livecoin also announced it would refund any remaining funds to users. The exchange will accept claims for refunds until March 17. Notably, any claims made after that will not be accepted.
At the time, Livecoin wrote on its website that it had lost control of all its servers and nodes. The exchange explained that the attack was a “carefully planned attack.” In their post, the exchange pleaded with its customers to stop using all its services. The post read in part:
“Dear clients, we ask you to stop using our service in all meanings: don’t deposit funds, don’t trade, don’t use API. We are under a carefully planned attack, which has been prepared, as we assume, over the last few months. We lost control of all of our servers, backend, and nodes. Thus, we were not able to stop our service on time.”
During the attack, between December 23 and December 24, the hackers modified the exchange rates to absurd values to about 15 times their average values.
EXMO, another exchange, suffered an attacked that saw it lose about 5% of its total assets. Someone speculated that the same attackers hacked both EXMO and Livecoin exchanges due to the use of the same wallet 1A4PXZE5j8v7UuapYckq6fSegmY5i8uUyq.
Types of crypto hacks
- Phishing and malware
Phishing is a cyber-attack that involves attackers using disguised emails to access operations of a firm. This is among the most common forms of attacks among cryptocurrency exchanges. In this technique, the recipient is tricked into believing the email is essential. Usually, the attacker will send an email that could be a request from the bank, a note from another employee, or other important messages. The attacker will add a link or a download attachment in the email that will have the malware.
Once the recipient clicks or downloads the attachment, the attacker then gains access to the device. The access allows the attacker to learn how the user and the firm operates. This entails learning how often another account communicates with others in the organization, the internal network architecture, where the crypto wallets are store, and other essential data. Eventually, the attacker will use the information to their advantage.
This is not a standard method. However, double spending occurs when a blockchain network is disrupted, and cryptocurrency is essentially stolen. Usually, the thief sends a copy of the currency transaction to make it look legitimate or erase the transaction altogether. The attacker can spend the same digital asset more than once.
Notably, double spending is popular among Crypto ATMs. Typically, crypto ATMs are not designed to wait for transactions to be written on the blockchain before dispensing the requested cash. Attackers use the same input as another transaction that has already been validated.
- The 51% attack
The 51% attack is an attack on a blockchain network where an entity gains over 50% control of the network. In such a case, the attacker gains enough power to exclude or modify transactions.
In a successful 51% attack, the attacker can prevent some or all transactions from being confirmed. Notably, the attacker is not able to reverse transactions from other users. They are also not able to prevent transactions from being created and broadcasted to the network.