Security should always be a high priority when exchanging your hard-earned paycheck for your favorite cryptocurrency. If your crypto gets stolen, there is almost no guarantee that you are getting that money back.
At the same time, most cryptocurrencies are not an anonymous safe haven for most criminals to launder stolen bitcoin into Maseratis and Mojitos in the Cayman Islands.
In most cases, it ends up being a lose-lose situation. in 2016, Crypto exchange Bitfinex's users would have nearly 120K of their bitcoins stolen, which would evaluate to around 4.5$ dollars today.
The hack was performed by stealing private keys from users, which essentially allowed malicious access to the victim's wallet. The amount would then be transferred to the Hacker's wallet.
The hackers then used a diverse array of methods of laundering the stolen Bitcoin by converting them to altcoins and NFTs, then breaking them down into thousands of transactions where the funds would eventually flow into a business to make the hack seem legit.
All the private keys of the victims were stored in a file on the cloud, encrypted by a password. How law enforcement accessed the file is unknown, but the most likely causes are a weak password or an outdated encryption algorithm (like MD5, even though this would still be very difficult).
The moral of the story is that all technologies require a robust security layer to function appropriately, especially blockchain technologies.
If you are interested in finding out how Relu Solutions can help your company leverage security and blockchain, contact us at info@relusolutions.com.
An illustration of how the laundering was structured by moving bitcoin between exchanges and different altcoins and NFT purchases.
Image from (https://bitcoinmagazine.com/technical/how-authorities-found-bitfinex-bitcoin)
Sources:
https://time.com/6146749/cryptocurrency-laundering-bitfinex-hack/