Bitcoin (BTC) has become one of the most popular and valuable digital assets in the world since its inception in 2008. However, like any other asset involving large amounts of money, it attracts not only legitimate investors but also criminals. As the number of cryptocurrency users grows, so does the number of Bitcoin thefts.
In this article, we will examine how bitcoins can be stolen, the methods criminals use, and provide real-life examples of Bitcoin theft.
What is Stolen BTC?
Stolen BTC refers to bitcoins that have been stolen or acquired through illegal means. There are several ways that bitcoins can be stolen, and each of these can lead to significant losses for both cryptocurrency owners and participants in the cryptocurrency markets.
BTC thefts can happen through various channels:
Wallet Hacking
Phishing Attacks and Fraud
Cryptocurrency Exchange Hacks
Loss of Access to Private Keys
How Bitcoins Can Be Stolen?
- Wallet Hacking
One of the most common methods of Bitcoin theft is wallet hacking. Many users who store their BTC in online wallets (or hot wallets) can become victims of cybercriminals if their devices or accounts are not properly secured.
Criminals use several methods to gain access to wallets:
Phishing attacks — Criminals create fake websites or send fake emails that look like official wallet services. If the user enters their login details, they fall into the hands of the criminals.
Malware and viruses — Viruses can infect users’ devices and steal private keys, which grant access to bitcoins.
Brute-force attacks — If a user uses weak passwords to protect their wallets, criminals may try to guess the passwords using programs that automatically try thousands of combinations.
- Phishing and Social Engineering
Phishing is a method where criminals trick users into giving away their personal information. For example, they may send an email that looks like a notification from a cryptocurrency exchange or service where you are registered. The email will contain a link to a fake website that looks exactly like the official one. If you enter your credentials on this site, they will be in the hands of the criminals.
Social engineering in the context of cryptocurrencies can also involve deception through forums, chats, and social networks, where criminals try to build trust and convince you to send them bitcoins or give them access to your private keys.
- Cryptocurrency Exchange Hacks
Cryptocurrency exchanges are attractive targets for cyberattacks. In 2014, the largest cryptocurrency exchange at the time, Mt. Gox, was hacked, and more than 850,000 bitcoins were stolen, which accounted for a significant portion of all bitcoins in circulation.
Exchanges can be hacked using various methods, including:
Malware that gives hackers access to private data.
Vulnerabilities in the software that allow bypassing security systems.
Physical attacks where criminals use social engineering techniques or bribe employees to gain access to wallets.
- Loss of Access to Private Keys
Private keys are critical information for accessing bitcoins. If someone loses their private key or forgets it, recovering access to the cryptocurrency becomes almost impossible.
Some users lose their private keys due to failure to follow simple security rules, such as:
Storing keys on unsecured devices or in the cloud.
Lack of backup copies.
Insufficient password protection or encryption.
Real-Life Cases of Bitcoin Theft
- Mt. Gox (2014)
One of the most famous cases of Bitcoin theft in history was the hack of the cryptocurrency exchange Mt. Gox in 2014. The exchange was the largest in the world at the time, processing up to 70% of all Bitcoin transactions.
As a result of the attack, hackers gained access to the exchange’s wallets and stole more than 850,000 bitcoins, which at the time were worth around $450 million. This became the largest theft in cryptocurrency history. The exchange later declared bankruptcy, and while some funds were returned to users, many still have not recovered their bitcoins.
- Bitfinex (2016)
In 2016, another major theft occurred when the cryptocurrency exchange Bitfinex was hacked. Criminals stole 120,000 bitcoins, which at the time amounted to around $72 million. Hackers exploited a vulnerability in the exchange’s security system, which allowed them to access users’ funds.
The exchange offered users compensation in the form of tokens that they could use to recover lost funds. However, despite this, the theft led to a significant loss of trust in cryptocurrency exchanges.
- Coincheck (2018)
In 2018, the Japanese cryptocurrency exchange Coincheck became the victim of a cyberattack, resulting in the theft of $534 million in NEM (not in Bitcoin, but in cryptocurrency). The exchange failed to provide adequate security for storing funds in its wallets, which led to the loss of such a large sum of money.
Although Coincheck promised to return the funds to users, this event became an important lesson for the entire cryptocurrency community about the need for stricter security standards.
- Backup Keys, Loss of Private Keys
Many bitcoins were also lost or “absorbed” due to accidents and human error. One of the most well-known cases is the story of James Howells, a British man who accidentally threw away a hard drive containing private keys to his bitcoins worth $75 million in 2013.
Howells, who worked in IT, accidentally discarded a hard drive that contained the keys for accessing 8,000 bitcoins. When he realized his mistake, it was too late, and all attempts to find the hard drive in the landfill were unsuccessful.
