Crypto, Hack, and Fraud: How To Avoid?

Even seasoned professionals can fall victim to online scams. BBC journalist Nick Robinson recently had his X (formerly Twitter) account hacked after falling for a phishing email disguised as an official message from the platform. The email falsely claimed his account had violated policies, prompting him to click a malicious link. Despite his cybersecurity training, Robinson admitted he was rushed and overlooked key red flags, such as the sender's email address.

This case highlights how fraud and hacking are growing threats in the crypto industry. In this article, we will explore recent incidents of crypto scams and wallet hacks and provide practical strategies to safeguard digital assets.

Part 1: Hacking in the Crypto Industry

The crypto industry has long been a target for hackers, with high-profile breaches causing billions in losses. Despite advancements in blockchain security, cybercriminals continue to exploit vulnerabilities. Let’s look at some of the most significant crypto hacks and how to protect against them.

Notable Crypto Hacks

1. The Ronin Bridge Hack (2022) – $625 Million Stolen
In one of the largest crypto heists in history, hackers infiltrated the Ronin Network, a blockchain powering the popular game Axie Infinity. They drained $625 million in Ethereum and USDC by compromising private keys. The attack went unnoticed for six days until a user attempted to withdraw funds. This breach highlighted the risks of cross-chain bridges, which have become prime targets due to their centralization points.

2. The Poly Network Attack (2021) – $611 Million Stolen, Then Returned
 In August 2021, an unknown hacker exploited a smart contract vulnerability in Poly Network, a cross-chain interoperability protocol. They siphoned $611 million but later returned the funds, claiming they wanted to expose security flaws. This incident underscored the importance of thorough, smart contract audits in preventing attacks.

3. FTX’s Mysterious Exploit (2022) – $400 Million Stolen
Shortly after FTX’s collapse, hackers drained $400 million from its wallets. While the source of the breach remains uncertain, some speculate it was an insider attack. This case highlighted the risks of centralized exchanges holding large user funds.

How to Avoid Crypto Hacks

While no security system is foolproof, individuals and businesses can take several steps to reduce the risk of hacks and protect their assets.

1. Use Cold Wallets for Storage

• Hot wallets (online wallets) are vulnerable to cyberattacks. Instead, long-term holdings can be stored in cold wallets (offline hardware wallets) to prevent unauthorized access.
• Enable multi-signature (multi-sig) authentication for added security. 

2. Beware of Phishing and Social Engineering Attacks

• Always verify email senders and website URLs before clicking on any links.
• Never share private keys or seed phrases, even if someone claims to be from an official platform.
• Use hardware security keys or two-factor authentication (2FA) to add an extra layer of security.

3. Stay Updated and Use Reputable Platforms

• Avoid using centralized exchanges to store large amounts of crypto—withdraw to a personal wallet instead.
• Only use trusted DeFi protocols and exchanges with a proven security track record.
• Keep software and wallets updated to patch vulnerabilities before hackers exploit them.

Part 2: Fraud in the Crypto Industry

While hacking poses a major risk in the crypto world, fraud and scams have also led to billions in losses. Fraudsters exploit the lack of regulation, anonymity, and hype surrounding crypto to deceive investors and steal funds. Let’s look at some of the most infamous crypto fraud cases and how to protect against them.

Notable Crypto Fraud Cases

1. OneCoin – The $4 Billion Ponzi Scheme (2014-2019)
 One of the largest crypto frauds, OneCoin was marketed as a revolutionary digital currency. However, it had no blockchain or actual value. Founder Ruja Ignatova, also known as the "Crypto Queen", convinced investors to buy OneCoin packages, promising massive returns. It was a Ponzi scheme, and by 2019, an estimated $4 billion had been stolen. Ignatova disappeared and remains on the FBI’s Most Wanted list.

2. FTX Collapse – Fraud and Mismanagement (2022)
 One of the biggest financial scandals in crypto history, FTX, once a top exchange, collapsed due to fraudulent practices by its CEO, Sam Bankman-Fried (SBF). FTX misused billions in customer funds, secretly diverting them to its trading firm, Alameda Research. When the fraud was exposed, FTX filed for bankruptcy, and SBF was arrested. The case shattered trust in centralized crypto exchanges, emphasizing the need for transparency.

3. NFT Rug Pulls – The Case of "Frosties" (2022)
 In early 2022, the creators of the NFT project "Frosties" raised over $1.1 million from eager investors, only to disappear overnight, deleting the project’s website and social media. This type of scam, known as a rug pull, has become common in the NFT space, where fraudsters create hype, sell tokens, and abandon the project.

How to Avoid Crypto Fraud

1. Verify Projects Before Investing

• Check for transparency—legitimate projects have clear whitepapers, public teams, and working products.
• Investigate the team—verify founders' backgrounds and past work. Anonymous developers increase the risk of fraud.
• Use tools like Etherscan or BscScan to analyze token contracts for suspicious activity.

2. Avoid Get-Rich-Quick Schemes

• If an investment guarantees high returns with little risk, it's likely a scam. Legitimate projects do not promise fixed profits.
• Be cautious of pyramid schemes and referral-based earnings, common in Ponzi-style crypto frauds.

3. Use Trusted Exchanges and Platforms

• Avoid unregulated exchanges—stick to reputable platforms with strong security measures and compliance records.
• Enable two-factor authentication (2FA) to prevent unauthorized access to your funds.
• Be wary of airdrops and giveaways that require private keys or personal information.

Final Thoughts

The crypto industry offers exciting opportunities but comes with significant risks. Hacking and fraud have resulted in billions of dollars in losses, with cybercriminals exploiting security weaknesses and scammers preying on investor greed. From high-profile exchange breaches to Ponzi schemes like OneCoin, these cases highlight the importance of caution and security in crypto.

However, these risks can be minimized by taking proactive steps. Using strong security measures, verifying investment opportunities, and avoiding suspicious platforms can significantly reduce the likelihood of becoming a victim. The crypto industry continues to evolve, and so do hackers' and fraudsters' tactics. Staying informed and following best practices is the best defense against cyber threats and scams.

While blockchain technology itself is secure, its users must be vigilant. In crypto, security is not just an option—it’s a necessity.