3 Trillion Won Lost... Cryptocurrency Hacking on the Rise

As the prices of virtual assets such as Bitcoin rise, cyberattacks aiming to steal these assets also increase in a similar trend. Recently, Bitcoin reached an all-time high, and the global virtual asset damage amount for the first to third quarters of this year has already surpassed the total damage for last year, amounting to 3 trillion KRW.

Damage Amount Surges 72% Compared to Last Year

According to cybersecurity firm Cyvers on the 18th, the amount of virtual asset hacking damage in the first to third quarters of this year reached 2.1 billion dollars (approximately 3.016 trillion KRW). This is a 72% increase compared to the same period last year.

The largest incident this year was the theft of more than 305 million dollars (about 438 billion KRW) worth of Bitcoin from the Japanese virtual asset exchange DMM Bitcoin. DMM Bitcoin could not recover from this incident and eventually decided to shut down.

Large-scale incidents related to virtual assets have also occurred domestically. In the first half of this year, a blockchain bridge service development company suffered a theft of 105.5 billion KRW, a blockchain-based entertainment NFT company lost 80 billion KRW, and a blockchain-based karaoke application development company lost 18 billion KRW.

Even 'Bridge' Exchanges Become Hacking Targets

Among these, the case involving blockchain bridge services is particularly noteworthy. A bridge is a type of exchange that facilitates the movement of virtual assets between different platforms, and it has become a prime target for hackers. Because bridges have complex systems with various security vulnerabilities and must maintain high liquidity for frequent asset exchanges, they are easy prey for hackers. According to a report by blockchain security firm Chainalysis, 69% of all virtual asset damages in 2022 occurred through bridges. Hackers stole assets by inserting bugs into bridge codes or exploiting cryptographic keys.

Hackers have also distributed malware through phishing emails disguised as being sent by virtual asset exchange staff. By infecting victims with malware, they searched for virtual asset wallets and private keys, which serve as account and password credentials, to steal assets.

A representative from the Korea Internet & Security Agency stated, "Since 2021, there have been no hacking-related leaks at major domestic exchanges that support transactions between virtual assets and KRW," adding, "This is the result of exchanges investing in enhanced security after previous incidents." However, they cautioned, "Service providers handling large-scale virtual asset transactions, such as blockchain bridges, can become targets of global hackers and must pay close attention to security."

On the 17th, Bitcoin reached an intraday record high of $107,800, breaking its all-time high in just one day, boosted by remarks from President-elect Trump about promoting a strategic reserve fund. The Bitcoin price was displayed on the electronic board at the Upbit Customer Center in Gangnam-gu, Seoul. Photo by Kang Jinhyung

The More Booming the Virtual Asset Market, the Greater the Hacking Damage

However, there are predictions that virtual asset theft will only increase in the future. With President-elect Donald Trump promoting 'pro-virtual asset' policies, the price of Bitcoin has surpassed 150 million KRW, setting new records. The more active the virtual asset market, the more intense attacks targeting individual users become. According to security firm JiranSecurity, there are also phishing attacks that steal users' IDs and passwords through cloned fake exchanges. These scams cleverly use the names, links, and logos of well-known overseas virtual asset exchanges.

Upbit, a virtual asset exchange, explained, "The list of virtual asset exchanges registered under domestic law can be checked on the Financial Intelligence Unit website," and warned, "Unregistered exchanges are not only operating illegally but are also highly likely to be fake exchanges." As of last month, there are a total of 40 virtual asset businesses that have met requirements such as obtaining ISMS (Information Security Management System) certification. A representative from blockchain wallet technology company Hexlant stated, "We are strengthening security through multisig technology, which uses two or more keys instead of relying on a single key," and added, "Recently, hackers have been concentrating their attacks on places with relatively weak security or where assets are concentrated."

DALL·E3

Government and Industry to Establish 'Digital Asset Protection Foundation'

The industry evaluates that with the implementation of the Virtual Asset User Protection Act (Virtual Asset Act) last July, a systematic defense framework has been established. The law prohibits unfair trading practices and arbitrary deposits and withdrawals of virtual assets, and mandates that the government supervise businesses and monitor suspicious transactions. It also requires businesses to take out insurance, join mutual aid associations, or set aside reserves to prepare for incidents such as hacking or system failures.

The government and industry have agreed to establish a 'Digital Asset Protection Foundation' and have begun the process of transferring user assets such as deposits and virtual assets from virtual asset businesses that have ceased operations. A representative from the Financial Supervisory Service stated, "Except in cases where user databases are damaged, lost, or falsely created, the goal is to transfer 100% of existing assets," adding, "Through the Virtual Asset Act, we have established a legal foundation for users to trade with confidence and strengthened user protection measures against hacking and unfair trading."