How cybercriminals steal cryptocurrency: Tactics, targets and tracing challenges decoded

A record-breaking $1.5 billion Ethereum heist from Bybit highlights rising crypto thefts, security vulnerabilities, and the role of North Korean hackers.

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A staggering $1.5 billion worth of Ethereum has been stolen from the cryptocurrency trading platform Bybit, with the FBI attributing the heist to North Korean hackers. The theft, the largest in an ever-growing series of cyberattacks targeting digital assets, has reignited concerns about the security of cryptocurrencies and the platforms that facilitate their exchange.

Rising Crypto Thefts

Despite the blockchain's inherent security features, cryptocurrency theft remains a persistent issue. In 2024 alone, an estimated $2.2 billion worth of digital assets were stolen, according to a report by specialist data firm Chainalysis. This marks the fourth consecutive year that global crypto thefts have exceeded $1 billion.

The report further highlights the increasing role of North Korean cybercriminals in such incidents, with 60 percent of stolen assets in 2024 being linked to the secretive state.

How Hackers Steal Crypto

Cryptocurrency heists typically target trading platforms and digital wallets used for storing assets. According to Chainalysis, the most common method used by cybercriminals in 2024 was the theft of private keys, which accounted for 43 percent of all stolen funds.

Private keys, essential for accessing digital wallets, are often compromised through phishing, hacking, or social engineering tactics. Cybercriminals also exploit vulnerabilities in major trading platforms, bypassing security defenses to gain unauthorized access to clients' funds.

"If you deposit money on a major platform, you're entrusting them with managing security for that cryptocurrency," explained Mounir Laggoune, head of crypto wealth management and investment platform Finary.

Is Blockchain Secure?

Blockchain technology, first developed in the late 2000s, has long been touted as a highly secure method of recording transactions. With all transactions distributed across a decentralized network, altering or deleting data is considered nearly impossible.

However, blockchain-based systems are not immune to attack. In rare cases, malicious actors have managed to manipulate the blockchain. One such incident occurred in 2019 when platform Gate.io lost $200,000 due to an attack on the blockchain itself.

Tracking Stolen Crypto

One of the blockchain’s key advantages is its transparency, theoretically making it easier to trace stolen funds. However, criminals often use mixing services, or "mixers," to obscure transaction histories.

According to the United Nations Office on Drugs and Crime (UNODC), mixers "blend potentially identifiable cryptocurrency funds with the purpose of obscuring the source of origin, thus making them untraceable." Once assets have passed through such a service, it becomes nearly impossible to connect them to their original owners.

Growing Threat, Rising Security Challenges

The record-breaking Bybit heist underscores the increasing sophistication of cybercriminals and the urgent need for enhanced security measures within the crypto industry. As regulators and industry leaders work to strengthen defenses, users are advised to remain vigilant, employ strong security practices, and avoid storing large amounts of cryptocurrency on centralized platforms.