{"id":52513,"date":"2016-09-14T16:45:20","date_gmt":"2016-09-14T23:45:20","guid":{"rendered":"https:\/\/blogs.mcafee.com\/?p=52513"},"modified":"2025-05-29T00:11:05","modified_gmt":"2025-05-29T07:11:05","slug":"cryptocurrencies-a-target-for-cybercriminals-part-1-the-risks-of-innovation","status":"publish","type":"post","link":"https:\/\/www.mcafee.com\/blogs\/other-blogs\/mcafee-labs\/cryptocurrencies-a-target-for-cybercriminals-part-1-the-risks-of-innovation\/","title":{"rendered":"Cryptocurrencies a Target for Cybercriminals, Part 1: the Risks of Innovation"},"content":{"rendered":"<p><a href=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-Hacker.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-52516 alignright\" src=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-Hacker.png\" alt=\"cryptocurrency-hacker\" width=\"398\" height=\"358\" srcset=\"https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-Hacker.png 398w, https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-Hacker-300x270.png 300w\" sizes=\"auto, (max-width: 398px) 100vw, 398px\" \/><\/a><\/p>\n<p>All cryptocurrencies are a target for cybercriminals. Anywhere there is value, criminals, fraudsters, and charlatans will soon follow. Call it the Willie Sutton principle. Sutton, a famous bank robber in the 1920s\u201330s, was asked why he robbed banks. His reply was \u201cBecause that\u2019s where the money is.\u201d The simplicity rings true. That same age-old principle still applies today in the digital world.<\/p>\n<p>Cryptocurrencies have been targeted since the early days of Bitcoin. Popularity fuels growth and increased valuation. Since the introduction of Bitcoin, hundreds of cryptocurrencies have emerged. According to <a href=\"https:\/\/coinmarketcap.com\/\">coinmarketcap.com<\/a>, the total market cap of cryptocurrencies exceeds $11 billion, with Bitcoin holding a majority stake of about $9 billion dollars. This amount of money is a strong lure for all kinds of malicious activity.<\/p>\n<h2><strong>Attacks on cryptocurrency<\/strong><\/h2>\n<p>Although cryptocurrency architecture is designed to be secure, it is not infallible. Once stolen, digital funds can be electronically laundered, obscured from authorities, and disappear into the electronic ecosystem with their new owners.<\/p>\n<p>There have been <a href=\"http:\/\/cryptocrooks.com\/biggest-bitcoin-theft\/\">many hacks and frauds<\/a>\u00a0during\u00a0the past few years targeting cryptocurrencies, causing significant losses. Mt. Gox lost a staggering $350 million in 2014, Bitcoinica lost $28 million in 2012, and in 2016 a string of incidents has already occurred, starting with Cryptsy losing $10 million, the DAO $50 million, and Bitfinex $65 million.<\/p>\n<p>Most of the big attacks have focused on the technical aspects of account control and the ability to transfer funds without the owner\u2019s consent. Some of the attacks were perpetrated by external threats, while others were inside jobs by trusted personnel.<\/p>\n<p>Many people unfamiliar with cryptocurrencies ask \u201cWhy don\u2019t governments put a stop to this?\u201d These systems are new, and even basic legal structures have not caught up. Separation from government oversight is largely viewed as a good thing by the community, but there are drawbacks. Cryptocurrencies suffer from a lack of regulation to establish consistent controls, legal responsibility, and accepted business practices. In the corporate world, laws and regulations establish clear boundaries to define legal responsibility, forbid situations in which\u00a0conflicts of interest may arise, and establish accountability to support informed decisions by investors. Most of the cryptocurrency enterprises operate only on a level of trust in the proprietors or the code. Sadly, technology is fallible to exploitation, users can be rash, gullible, and manipulated by attackers, and many times owners of the systems are the very culprits behind the losses. The right balance has yet to be struck. Until then, criminals have the opportunity to run rampant, with much less risk compared with highly regulated monetary services.<\/p>\n<p><a href=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-Hacker2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-52515\" src=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-Hacker2.png\" alt=\"cryptocurrency-hacker2\" width=\"640\" height=\"426\" srcset=\"https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-Hacker2.png 640w, https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-Hacker2-300x200.png 300w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/a><\/p>\n<h2><strong>Threats targeting cryptocurrencies<\/strong><\/h2>\n<p>Most cryptocurrencies are used for decentralized asset exchange. That is just a fancy way of saying they act as a form of money. One that\u00a0is purely digital, can easily cross borders, be concealed, and transferred seamlessly between parties. Bitcoin and many like it are largely anonymous. The transactions are public, contained in the open blockchain ledger, but in most cases the sender and receiver cannot be easily identified.<\/p>\n<p>Attacks tend to target the control of assets via transactions. The security of these systems is\u00a0based upon private keys, which are an identity verification system. If an attacker compromises a victim\u2019s private key, he or she\u00a0can control the funds of the account without recourse from the victim. Many attacks gain access to accounts or tamper with transactions to siphon off assets from the victim&#8217;s to the attacker\u2019s accounts.<\/p>\n<p>Cryptocurrencies are also widely used in criminal activities. Ransomware extortions are largely paid in Bitcoin, as the attackers demand. Due to the nature of these transactions, once money is transferred, it cannot be recovered. The tracking of money to people is near impossible due to the anonymity of these systems.<\/p>\n<p><a href=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-ethereum.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-52514 alignright\" src=\"https:\/\/securingtomorrow.mcafee.com\/wp-content\/uploads\/Cryptocurrency-ethereum.png\" alt=\"cryptocurrency-ethereum\" width=\"228\" height=\"180\" srcset=\"https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-ethereum.png 338w, https:\/\/www.mcafee.com\/blogs\/wp-content\/uploads\/Cryptocurrency-ethereum-300x237.png 300w\" sizes=\"auto, (max-width: 228px) 100vw, 228px\" \/><\/a>Cryptocurrencies and blockchains are used for more than just money. Technologists and entrepreneurs are creating innovative foundational structures for use in digital services. The decentralized nature can make the capability extremely robust. The open transparency of the transactions builds trust in the system and, coupled with a monetary element, such services can play a powerful role in business, communication, and nontransmutable record keeping. These are powerful tools, but they also present new opportunities for theft, fraud, and misuse.<\/p>\n<p><a href=\"https:\/\/www.ethereum.org\/\">Ethereum<\/a> is a currency and public blockchain that\u00a0features \u201csmart contract\u201d technology which runs programs across the widely distributed user base without\u00a0central control. Basically, code is created and then run by the users, with no administrative oversight. People trust the code. All operations and transactions are transparent. As long as actions do not violate the code, they are allowed and thus correct. But there have been problems. After all, the people come up with the rules that\u00a0the code enforces.<\/p>\n<p>Recently <a href=\"https:\/\/daohub.org\/\">the DAO\u2014<\/a>an Ethereum Decentralized Autonomous Organization investment fund that allows contributors to\u00a0vote on which\u00a0companies to back\u2014got into trouble. Money was transferred from many accounts into an \u201cattacker\u2019s\u201d account. But this was done based upon the functions allowed by the code. Many screamed theft, but others simply stated the rules were followed and thus the transfers\u00a0must stand. It remains a mess, but $50 million was siphoned from users, against their desires.<\/p>\n<p>Stay tuned for Part 2, a discussion of\u00a0the risks of cryptocurrencies merging with social media platforms and how attackers could\u00a0gain new advantages.<\/p>\n<p>&nbsp;<\/p>\n<p>Interested in more?\u00a0 Follow me on\u00a0<a href=\"https:\/\/twitter.com\/Matt_Rosenquist\">Twitter (@Matt_Rosenquist)<\/a>\u00a0and\u00a0<a href=\"https:\/\/www.linkedin.com\/today\/author\/matthewrosenquist\">LinkedIn<\/a>\u00a0to hear insights and what is going on in cybersecurity.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>All cryptocurrencies are a target for cybercriminals. Anywhere there is value, criminals, fraudsters, and charlatans will soon follow. Call it&#8230;<\/p>\n","protected":false},"author":695,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[442],"tags":[76,4452],"coauthors":[4136],"class_list":["post-52513","post","type-post","status-publish","format-standard","hentry","category-mcafee-labs","tag-cybercrime","tag-cybersecurity"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cryptocurrencies a Target for Cybercriminals, Part 1: the Risks of Innovation | McAfee Blog<\/title>\n<meta name=\"description\" content=\"All cryptocurrencies are a target for cybercriminals. Anywhere there is value, criminals, fraudsters, and charlatans will soon follow. 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