The popular cryptocurrency exchange Crypto.com paused withdrawals for 14 hours earlier this week, but there are conflicting reports around what actually happened. One blockchain security firm estimates at least $15 million of Ethereum (ETH) was stolen, but the Crypto.com team says all customer funds are safe.
Late Sunday night, Crypto.com tweeted that a small number of users had reported “suspicious activity” and said withdrawals would be suspended while the team investigated.
After withdrawals had resumed, Crypto.com CEO Kris Marszalek posted that no customer funds had been lost and promised a full investigation. Crypto.com users now need to log back in to their accounts and reset their two factor authentication.
The company also introduced a new level of security. Users will now have to wait 24 hours after whitelisting a new withdrawal address before they can withdraw any cash. Whitelisting is a common security measure whereby investors set up verified addresses and allow withdrawals only to those addresses.
Confusion around missing funds
Crypto security firm PeckShield published a different version of events. It believes at least 4,600 ETH was stolen — worth around $15 million. The firm claims some of that Ethereum is being washed via a privacy app called Tornado Cash.
Several Crypto.com users complained on Twitter that funds were missing from their accounts. However, some also posted that those funds had later been returned. At time of writing, it isn’t clear how this happened, and whether the exchange itself lost any funds.
Sadly, cryptocurrency investors are no strangers to these types of hacks. Last year, hackers stole funds from 6,000 Coinbase customers, another well-known exchange. Indeed, security firm Elliptic estimates over $10 billion was lost to crypto hacks, thefts, and scams in 2021.
Crypto.com Coin’s price rose over 850% in 2021, partly on the back of an aggressive advertising campaign. The company bought the naming rights to the Staples Center (now the Crypto.com Arena) and signed sponsorship deals with various sports teams. Plus, multi–award winning star Matt Damon was the frontman for its fortune-favors-the-brave commercials.
However, the crypto market as a whole has lost around $1 trillion since its November highs, with many top cryptocurrencies losing 20% to 30% of their value. CRO is no different. The coin had already fallen 50% from its November high, and fell further on reports of the security incident.
Protect your funds against hackers
As a crypto investor, there are several steps you can take to make it harder for criminals to access your assets. Here are a few of them:
- Use secure crypto exchanges. Look for established cryptocurrency platforms that are transparent about their security measures. At the very least, they should keep the majority of funds offline in what’s called “cold storage.” Additional features, such as third-party insurance and security audits, also show the company takes security seriously.
- Enable user-level protection. All top cryptocurrency exchanges have various additional security features you can sign up for, such as two-factor authentication (2FA), whitelisting addresses, and anti-phishing controls. Activate as many as possible — it may make it less user-friendly, but if it protects your funds, it’s worth it.
- Consider an external crypto wallet. An external hardware wallet can help keep your funds extremely safe. You get complete control over your assets and can keep your coins and tokens offline, which makes it hard for criminals to access. However, you’ll also be responsible for remembering the password and seed phrase (a series of words you’d need to restore access to your wallet). Billions of dollars worth of crypto are sitting in wallets that people can’t access because they forgot their passwords.
The cryptocurrency industry is still evolving at a rapid pace and platforms are not subject to the same regulations that banks and other financial institutions are. One consequence of this is investors’ cash is not covered by FDIC insurance as it would be in a bank. In many cases, it can be impossible to recover stolen funds.
Ultimately, the decentralized ethos of cryptocurrency — taking out the middleman — means cryptocurrency investors need to work harder to protect their funds. The steps above can help reduce the risk of falling victim to this type of crime.
Buy and sell cryptocurrencies on an expert-picked exchange
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Emma Newbery owns Ethereum and Crypto.com Coin.
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