Published: November 14, 2021 on our newsletter Security Fraud News & Alerts Newsletter.
A Twitter post by Poly Network, a DeFi (decentralized finance platform), announced the theft of $600 million in cryptocurrencies from their platform. Considered the largest cryptocurrency theft ever, Poly Network tweeted a plea to the hacker to return the stolen crypto saying, “The money you stole are from tens of thousands of crypto community members, hence the people.” If there’s one lesson we can take away from this massive theft it’s the unpredictable vulnerabilities of cryptocurrencies. These e-currencies are not backed or insured by a government, like U.S. dollars are in a traditional banking system. If you lose your crypto to theft, it’s safe to assume it’s forever lost.
The Federal Trade Commission (FTC) explains if crypto is stored with a third-party company that goes out of business, “the government has no obligation to step in and help get your money back.” However, in a remarkable twist, the hacker complied with Poly Network’s request says Reuters, and returned nearly all the stolen assets less than 48 hours after the hack. Crypto investors know that’s an extremely rare occurrence, and those considering investing in the 2,000+ different cryptocurrencies should know the risks.
Crypto Theft A Growing Threat
It’s no surprise that crypto hacks are a growing problem. The FTC reports a 1,000% increase in crypto theft between the months of October 2020 and March 2021. Close to 7,000 investors lost over $80 million during this six-month period. Investopedia reports just two years ago, bitcoin variety called “Coincheck” lost $524 million to a hack, while “BitGrail” lost $195 million the same way. They were two of the largest crypto currency hacks at the time, proof-positive that these crimes are a growing threat to investors.
Poly Network has a lot to be grateful for, as do their crypto customers. The company works across crypto blockchains, tweeting the hacker “exploited a vulnerability between contract calls” that caused the theft. Kaspersky describes blockchains as the way crypto transactions “are recorded into ‘blocks’ and time stamped…the result is a digital ledger of cryptocurrency transactions that's hard for hackers to tamper with.” That being said, hackers continue finding new ways to compromise cryptocurrencies.
So, do your research before deciding whether to invest in crypto, and remember, if you do invest, those funds are not protected from loss or theft. Tread carefully in this newest financial frontier!
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