How Pirates Steal Cryptocurrency: Where Do the Billions Go?

Cyberattacks targeting cryptocurrency platforms have reignited concerns about the security of digital assets and the fate of stolen funds, particularly given the ease of cross-border transfers and the difficulty of recovering the money, despite the traceability of transactions.

Data from CertiK revealed losses totaling $1.2 billion resulting from 255 cyberattacks between July and September, compared to $822 million across 222 attacks in the previous quarter. Meanwhile, the Binance platform suffered a hack with estimated losses of around $6.3 billion.

Most thefts begin by exploiting human error through phishing emails, compromised accounts, and malware to obtain login credentials and private keys for digital wallets, enabling hackers to transfer funds directly to wallets they control.

Hot wallets connected to the internet are more vulnerable to hacking, although a cold wallet was targeted in July, resulting in the theft of more than $100 million in Bitcoin after a software vulnerability exposed the keys of thousands of wallets.

Risks also include vulnerabilities in smart contracts and digital bridges used to transfer cryptocurrencies between networks, while artificial intelligence enables the discovery of vulnerabilities and the design of attacks at a faster pace.

Although transactions are recorded on blockchain networks and are traceable, recovering stolen funds is difficult due to the absence of a central authority capable of reversing transfers. However, some centralized platforms and stablecoin issuers, such as Tether and Circle, can freeze assets.

To obscure the trail of stolen funds, hackers distribute them across dozens or hundreds of wallets, transfer them across multiple networks and services, or hold them for extended periods before gradually liquidating them, thereby reducing the chances of detection and freezing.