The rush of money heading to cryptocurrencies means more opportunities for hackers to get rich.
Researchers from Ernst & Young found that more than 10 percent of funds from initial coin offerings have been lost or stolen by hackers. That’s about $400 million from $3.7 billion in funding. The firm looked at 372 ICOs who were hit by attacks, highlighting cryptocurrency’s risky market.
As cryptocurrencies become more prevalent, with celebrities like the Wu-Tang Clan’s Ghostface Killah creating their own ICO, the craze has set off a boom in investments. It’s also meant agencies like the US’s Securities and Exchange Commission urge “extreme caution” with cryptocurrencies, as well as the Chinese government outright banning Bitcoin.
The majority of the thefts happen through phishing, a common attack designed to trick victims into clicking on malicious links. Hackers stole up to $1.5 million from ICO funding per month, according to the report. The firm called for higher standards of security in cryptocurrency to stop the outbreak of thefts.
“Once new standards are in place that are accepted by all participants-allowing for improved transparency, fraud prevention, and legitimacy – the protection of investors and users alike has a greater chance of success,” Greg Cudahy, EY’s global technology, media and entertainment and telecommunications leader said.
The research indicated that hackers were attracted to cryptocurrency markets because of how quickly it was growing and the amount of money involved. It also noted that the frequency of attacks were increasing.