Hackers Nab $16 Million In BTC Through Bitcoin Wallet Exploit

Tony "The Bull" Severino

4 years ago

3 mins read

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A long-time holder was unfortunately taken for their 1,400 BTC – over $16 million worth of Bitcoin – in a wallet exploit. But how were hackers able to make off with this user’s cryptocurrency? And what can others do to avoid the same situation from happening to them?

Crypto Crime Takes A Bow But Is Just As Active Behind The Curtain

Due to the lowered frequency and severity of big crypto exchange hacks compared to the past, Bitcoin-related hacks have since cooled off in the media.

Phishing attempts, ransomware, and SIM-card hacks are just three examples of crypto-related crime that isn’t widely covered.

It wasn’t until recently when several high profile Twitter accounts of celebrities, politicians, and company CEOs were hacked as part of a phony Bitcoin giveaway scam.

Hacks are commonplace in crypto, but it is only when there’s something of significance attached does it make the news. And a new hack uncovered involving over $16 million in stolen BTC could be the next headlining story to make it to publishing.

BTCUSD 1400 BTC = Roughly $16,000,000 USD | Source: TradingView

How Hackers Were Able To Steal 1400 Bitcoin, Over $16 Million In USD Value

According to the appropriately named GitHub user ‘1400BitcoinStolen,’ the enormous sum of BTC matching his username is now gone in part of a hack involving the Bitcoin wallet Electrum.

The fault is not of Electrum’s nor really the user’s, but it does put a spotlight on the importance of two key issues.

pic.twitter.com/G4gPwa7pxw

— Ben Verret (@verretor) August 30, 2020

The user utilized Electrum software from the last time they accessed their BTC in 2017. Electrum has since issued security updates that this user hasn’t yet installed.

Before they could move their Bitcoin, they were prompted to update and patch potentially critical issues. But when they did, the software contacted the hacker’s server using an exploit that the real security update would have likely prevented. 1400 BTC was immediately emptied from the wallet and into the hacker’s – a somber reminder to always keep software up to date.

Related Reading | The Most Common Bitcoin Scams And How To Avoid Them

Because Electrum is a “light client” software engineer Ben Kaufman explains in a deeper Twitter thread on the subject that this means the software must connect to a public server before it is then be connected to the blockchain.

It’s this trusted third-party acting as a middle man where hackers were able to exploit the process – the other key reminder to never trust third-parties with your private keys.

This unfortunate user likely can’t get their funds back, but others have been luckier. For those that experience this issue and act fast enough can potentially “double-spend” over the transaction if the hacker used a low enough fee.

For everyone else, let this be a reminder to keep your software up to date and to rely on cold storage methods whenever possible.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
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Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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