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Six devastating crypto thefts — and how to avoid them

The world of crypto is exciting — a place where you can taste true financial freedom from banks.

But with freedom comes responsibility — and when you invest in digital assets, it’s crucial to take precautions so funds are safe and secure. Why? Because if your savings are stolen, there won’t be a customer service number you can call to make things right.

Don’t just take our word for it. Here, we’re going to take a look at six devastating crypto thefts — and how you can protect yourself from ending up in a similar situation. While some of these real-life tales center on traders who got unlucky, others reveal audacious crimes affecting major crypto businesses… not to mention their customers.

1. The silly streamer

Over the summer, a Brazilian crypto streamer called Fraternidade Crypto made a catastrophic mistake. During a livestream, the entire world could see his private keys on the screen — meaning anyone could get their hands on his stack. Despite the fact they were only visible for a couple of seconds, it was enough time for an eagle-eyed viewer to drain his accounts.

The streamer ended up losing over $60,000 — and described it as “one of the worst days of his life.” Luckily for him, the thief ended up having a change of heart, and returned $50,000 of it. While there have been question marks over whether this was a stunt on Fraternidade Crypto’s part, it remains a cautionary tale for us all. 

How to avoid this: Make sure your private keys are visible to absolutely no one, and set up additional safeguards. Linen allows you to protect your assets with three private keys — meaning that, if one of them is stolen, a criminal would still be unable to raid your wallet.

2. The nicked NFT

Literally anyone can end up falling victim to thieves — and NFTs are just as much at risk as crypto. The actor Seth Green, best known for starring in Family Guy and Guardians Of The Galaxy, found this out the hard way when his Bored Ape was stolen in front of his eyes. He was duped by a cloned website mimicking a popular NFT collection called the Gutter Cat Gang — and inadvertently authorized scammers to transfer tokens out of his wallet.

If all this wasn’t bad enough, Green’s Bored Ape — which he affectionately calls Fred Simian — was about to be the starring character in an upcoming TV show before being “kidnapped.” The celebrity ended up having to pay 165 ETH (worth $297,000 at the time) to get it back. “I’m crazy careful with separate wallets and security but still got got,” Green admitted in May 2022.

How to avoid this: Phishing attacks can be incredibly convincing — and in some cases, it’s near impossible to tell legitimate websites apart from fake ones. Work on the mantra of “trust no one,” and remember: If it sounds too good to be true, it normally is. Airdrops, giveaways and fake celebrity endorsements are just some of the tactics used to reel unsuspecting victims in.

3. The Mt. Gox mayhem

Bitcoin launched all the way back in 2009 — and it didn’t take long for terrifying hacks and thefts to make their presence felt. One of the worst, even to this day, surrounds Mt. Gox. At its peak, it was the biggest BTC exchange of all — accounting for over 70% of all transactions.

All of that changed in 2014, when a jaw-dropping 850,000 BTC was brazenly stolen. And to make matters worse, 750,000 of those belonged to the exchange’s customers. While this stash was worth $480 million at the time, this would later be worth a staggering $58.6 billion when Bitcoin accelerated to record highs of $69,000 in November 2021.

Mt. Gox ended up filing for bankruptcy protection, with many early Bitcoin adopters left out of pocket — denying them a life-changing amount of money. While 142,000 BTC was later recovered, customers are still waiting to receive their share… almost 10 years on.

How to avoid this: Unfortunately, “trust no one” also applies to centralized exchanges — and in recent years, we’ve seen history repeat itself. Just last year, Celsius and FTX went bust after suspending withdrawals and leaving millions of customers in the lurch. Linen is a self-custody, multi-sig wallet — and that means the company behind it can’t access user funds. Even in the worst-case scenario, you’d be able to get to your wallet through a third-party interface.

4. The crypto muggings

Not all of the dangers surrounding crypto thefts are based in the online realm. Back in May 2022, The Guardian ran a horrifying report that revealed how investors were being targeted on the street in a spate of muggings. Some people had thousands of pounds stolen after their phones were taken by robbers.

Oftentimes, crypto isn’t what the criminals are looking for — but they take the opportunity to act. Typically, victims are forced to unlock their phone, and in some cases, physical force is used to get through hurdles such as Face ID. From here, accounts can be drained to wallets that can be difficult to trace. And while the police have come on leaps and bounds in investigating such crimes over recent years, some forces lack the technical skills to bring perpetrators to justice.

How to avoid this: Conceal apps in a folder that’s difficult to detect. You should also avoid logging into exchanges in public places, as strangers may see your balance, or worse, watch you type in a PIN. 

5. The busted bridges

Bridges serve a vital role in allowing cryptocurrencies to move from one blockchain to another — ultimately helping to ensure these networks are less fragmented and siloed. But in recent years, compelling security concerns have emerged, and North Korean hackers have been able to exploit vulnerabilities to the tune of billions of dollars.

Perhaps one of the worst examples concerns the Ronin Bridge, which powers the popular play-to-earn game Axie Infinity. Back in March 2022, an astounding 173,700 ETH and 25.5 million USDC was stolen after an attacker managed to seize control of five of the nine validator signatures required to initiate transactions. To add insult to injury, it took six days for the embattled project to notice.

Ronin isn’t the only one either — with Harmony, Nomad and Wormhole just some of the other bridges affected last year. In the space of just eight months, the blockchain analytics firm Chainalysis estimated that over $2 billion had been stolen from cross-chain protocols — 69% of the grand total taken by thieves.

How to avoid this: Trust no one, trust no one, trust no one. If you have to use a bridge, scrutinize the security measures they have in place — and rely on projects that have a greater number of validators. 

6. The shaky security

Mt. Gox isn’t the only exchange that has fallen victim to extraordinary security breaches, with Bitfinex another prime example. In 2016, close to 120,000 BTC was stolen — with Bitcoin’s spot price plunging by 20% as the news emerged. The embattled exchange had little choice but to reduce the account balances of their customers by 36%, and provide them with alternative tokens until they could be made whole. 

This story took on a whole new dimension in 2022 when the U.S. government managed to recover a large chunk of this Bitcoin. Worth $3.6 billion, it amounted to one of the biggest seizures in American history. A husband and wife (one of them an amateur rapper, don’t ask) were arrested and charged amid allegations they had attempted to launder the proceeds by purchasing gold, NFTs, and gift cards.

How to avoid this: An old saying on Crypto Twitter (now known as Crypto X?) is this: “Not your keys, not your Bitcoin.” Over the years, we’ve painfully learned that no centralized exchange is too big to fail — and vulnerabilities can emerge from nowhere. The world of digital assets has so much to offer, but it’s never been clearer that self-custody is crucial for protecting yourself and your financial future.

Don’t become a victim

The threat of crypto thefts never goes away, and even the most experienced investors can fall victim to devastating crimes. But there’s no need to join them — and go through these agonizing experiences. Linen avoids the issues of commingled funds, poor security measures and centralized failures by ensuring you’re in control over your digital assets at all times.