Organizations and individuals must adopt cybersecurity best practices to prevent cyberattacks in the ever-evolving landscape of cyber threats. One can successfully defend against common cyberattacks such as phishing, ransomware and denial-of-service attacks by implementing mitigation techniques to reduce the likelihood of such attacks.
In the interconnected digital landscape, cyberattacks are a known and ever-present threat, and the world of cryptocurrency is no exception. That said, organizations in the crypto space must understand the importance of cybersecurity incident response planning to mitigate the risks of cyberattacks.
This article delves into the eight most common cyberattacks in the crypto space, essential cyber threat prevention tips and cybersecurity preparedness strategies to defend against them.
What is a cyberattack?
An intentional attempt to gain access to, interfere with, or harm computer networks, devices or computer systems is known as a cyberattack. It entails unlawful acts carried out by malevolent people or organizations looking to take advantage of weaknesses for espionage, financial gain or disruption.
Cyberattacks involving cryptocurrency have increased over the past few years and have resulted in large financial losses. Although the expected amount of funds stolen in cyberattacks in 2023 was $1.7 billion, a 54.3% drop from 2022, the number of individual hacking events actually went up. This implies that although the total worth of stolen funds may have declined, the number and diversity of attacks are on the rise.
Attacks against decentralized finance (DeFi) protocols, which were formerly the main targets, have decreased. In 2023, these platforms incurred $1.1 billion of the $3.1 billion in stolen funds that occurred in 2022. On the other hand, victims of various cybercrimes, like email phishing, have lost millions of dollars.
These statistics underscore the need for increased vigilance, knowledge of common cybersecurity threats and cyberattack prevention strategies. This knowledge empowers users to recognize and thwart cyber threats, safeguarding against common cyber risks such as phishing and social engineering attacks.
1. Phishing attacks
In the world of cryptocurrencies, a phishing attack occurs when someone uses misleading channels, such as emails, texts or websites, to fool users into disclosing their private keys or seed phrases.
For example, hackers could send emails imitating a well-known cryptocurrency exchange, informing the recipient that their account is in danger and asking them to confirm their details by clicking on a certain link. When a victim clicks on the link, they could unintentionally input their private keys or seed phrases on a phony website, providing hackers access to their money.
How to prevent phishing scams
Enhancing cyber resilience against phishing attacks requires a multi-faceted approach encompassing various cybersecurity measures for prevention. Some of the examples include:
Use two-factor authentication (2FA) to add an additional degree of security to cryptocurrency accounts.
Verify URLs twice to ensure they are authentic before entering any important information.
When dealing with dubious messages, proceed with caution and refrain from opening attachments or clicking on links from unidentified sources.
2. Malware attacks
A malware attack is when someone uses malicious software to infect devices or compromise wallets to steal cryptocurrency. The objective of this kind of assault is to obtain unapproved access to users’ cryptocurrency holdings and move them to the attacker’s wallet.
Cryptojacking is a common form of mining malware that secretly utilizes a victim’s computing power to mine cryptocurrency. Attackers often inject malicious code into websites or applications, where it operates in the background and consumes the victim’s resources without their knowledge or consent. As a result of this unauthorized use, the victim may suffer possible financial losses, higher energy costs and decreased device performance. 
Precautions to protect against crypto-malware attacks
To protect themselves from malware attacks within the cryptocurrency industry, users can adopt various cyberattack defense mechanisms, such as:
Install and maintain frequent updates for trustworthy antivirus and anti-malware software on their devices.
To prevent downloading malware-infected products, only download apps and software from reputable and official sites.
Use caution while downloading wallet programs or browser extensions, especially from unreliable or unknown sources, as they can be malware masquerading as trustworthy software.
3. Ransomware attacks
When ransomware attacks occur in the cryptocurrency space, malicious malware encrypts files containing the victim’s private keys or cryptocurrency wallets, making them unreadable. Then, in return for the decryption key, the attacker requests payment in cryptocurrency, usually Bitcoin.
The WannaCry attack, which demanded a Bitcoin ransom, is a well-known example. Another noteworthy instance concerned the Ryuk malware, which targeted multiple organizations and demanded BTC payments. Furthermore, the infamous Maze ransomware group targeted cryptocurrency exchanges and demanded large amounts of Bitcoin from them.
How can crypto ransomware attacks be prevented?
By strengthening their cybersecurity posture against ransomware attacks, users can avoid becoming victims of such attacks in the cryptocurrency industry. Some of the preventive measures include:
Maintain regular offline backups of cryptocurrency wallets and keep private keys in cold storage to lessen the effects of ransomware attacks.
Use caution while opening attachments from emails and clicking on links from unidentified or unknown sources.
To patch flaws and protect against known ransomware attacks, keep operating systems and security applications up to date.
4. Denial-of-service (DoS) attacks
Denial-of-Service (DoS) attacks in the cryptocurrency domain involve flooding either a crypto exchange or a blockchain network with an overwhelming amount of traffic aimed at disrupting regular operations. Through this tactic, attackers seek to exhaust the target system’s resources, leading to potential slowdowns or even complete service disruptions. Consequently, the system may struggle to process transactions, validate blocks, or maintain the overall functionality of the network.
A classic blockchain DoS attack involves malevolent actors taking advantage of flaws in the consensus mechanism or network protocol to flood the network with data packets or transactions. The network becomes congested, and delays occur as a result of the deluge of unauthorized transactions or requests that continue to utilize network bandwidth and processing power.
For example, the Ethereum network experienced a DoS attack known as the “Spam Attack” in 2016. During this attack, the perpetrator flooded the network with a large number of low-value transactions, congesting the network and causing delays in block validation and transaction processing. As a result, Ethereum users experienced slowdowns and increased transaction fees due to the network congestion caused by the DoS attack.
How to mitigate the risk of a DoS attack
By implementing effective cyber defense strategies, cryptocurrency stakeholders can protect themselves from DoS attacks in the cryptocurrency space. Examples of cybersecurity measures for prevention against DoS attacks include:
Select reliable exchanges with strong security protocols and specialized DoS prevention tools to lessen the likelihood of these kinds of attacks.
To reduce the chance of experiencing disruptions due to unavailability on a particular platform, distribute your cryptocurrency holdings over several exchanges.
Use hardware wallets to store cryptocurrency offline and lessen your susceptibility to potential denial-of-service attacks directed at internet exchanges.
5. Man-in-the-Middle (MitM) attacks
Man-in-the-Middle (MitM) attacks in cryptocurrency involve intercepting communication between a user and a crypto exchange or wallet, aiming to steal login credentials or private keys. These attacks occur when an attacker positions themselves between the user and the intended recipient, allowing them to eavesdrop on and potentially alter the exchanged data. 
Exploiting vulnerabilities in the communication channel, attackers gain unauthorized access to sensitive information such as login credentials or private keys, compromising the user’s cryptocurrency assets. MitM attacks pose a significant threat to the security and integrity of crypto transactions and user accounts.
Hackers were able to introduce malware into infected systems during a 2018 attack that was directed toward Ledger hardware wallets. The malware changed the destination address shown on the Ledger screen during Bitcoin transactions when users connected their Ledger devices to these compromised computers. As a result, funds were inadvertently transferred to the attacker’s wallet rather than the intended recipient.
What are the best defenses to prevent a MiTM attack?
Proactive measures against cyber threats like MiTM include the following:
Ensure websites are using HTTPS connections, which are denoted by the browser’s padlock icon and have valid SSL certificates.
Avoid using public WiFi networks to access cryptocurrency accounts, as the traffic on these networks can be easily intercepted.
When accessing cryptocurrency accounts online, use a virtual private network to encrypt internet traffic and improve security.
6. SQL injection attacks
Although the blockchain’s underlying technology is intrinsically safe, apps developed on top of it frequently use Structured Query Language (SQL) to communicate with conventional databases. These places of interaction are the target of an SQL injection attack. These attacks exploit vulnerabilities in the way an application processes user input. 
An attacker can enter harmful SQL code into fields like search bars or forms when a blockchain application neglects to properly validate or sanitize this input. If successful, this code is executed by the unwary application, giving the attacker access to the underlying database without authorization.
There can be severe repercussions for blockchain systems. Attackers may cause large financial losses by stealing transaction records, private keys or sensitive user information. They can also alter or remove information from the application’s database, which could interfere with its operation or jeopardize the accuracy of related blockchain records.
How are SQL injection attacks prevented?
To prevent SQL injection attacks, users should:
Select safe platforms that have a track record of putting strong security measures in place.
Employ parameterized queries or prepared statements to further separate SQL code from user input, preventing unauthorized execution.
Notify the platform’s security team of any potential vulnerabilities you find so they can apply a patch and reduce the risks.
7. Zero-day attacks
Zero-day attacks in cryptocurrency occur when attackers exploit undisclosed vulnerabilities in crypto software or hardware wallets. These vulnerabilities, not previously identified by developers, allow attackers to launch sudden and unexpected attacks on users. Unlike known vulnerabilities that are addressed through security updates, zero-day vulnerabilities are discovered by attackers before developers can patch them.
As a result, users are left vulnerable to exploitation until developers develop and deploy patches or other countermeasures. For instance, attackers may find a weakness in a blockchain’s smart contract execution logic, which would allow them to secretly alter transactions or steal funds. 
The Ronin Network, a blockchain network used for the popular Axie Infinity game, was severely attacked via a zero-day exploit in March 2022. Hackers took advantage of an undiscovered weakness in the bridge contract and validator nodes of the network to steal an astounding $625 million worth of Ether ETH$3,637.71 and USD Coin USDC$1.00. By bypassing the network’s security protocols, the attackers were able to forge fake withdrawals due to this vulnerability.
How to protect against zero-day attacks
To prevent zero-day attacks, one can take the following preventive steps:
Keep operating systems, wallets and exchanges up to date by applying patches and updates on a regular basis to reduce the chance of exploitation.
For offline cryptocurrency storage, consider utilizing hardware wallets, which offer an extra degree of protection against remote attacks.
Follow security news and alerts from reliable sources to stay updated on security updates and any vulnerabilities. Comprehensive security audits can help identify potential weaknesses in blockchain code and infrastructure.
8. Social engineering attacks
Social engineering attacks in the context of cryptocurrencies entail tricking people via social media, impersonation and other techniques to obtain unlawful access to their cryptocurrency assets. Psychological tactics are employed to persuade and mislead victims into disclosing private keys or login passwords or transferring cryptocurrencies straight to the wallet of the attacker. 
These attacks pose a serious risk to the security of cryptocurrency users and their assets since they frequently rely on taking advantage of victims’ familiarity and confidence to trick them. Protecting against social engineering attempts in the cryptocurrency space requires awareness and vigilance.
Cryptocurrency payments provider CoinsPaid suffered a $37-million loss in July 2023 as a result of a sophisticated social engineering attack. An employee at CoinsPaid received what appeared to be a harmless employment offer, which set off the attack.
Through a thorough interview procedure and a convincing impersonation of recruiters, the hackers managed to deceive the employee into installing a dangerous application on their computer. Through the use of this malicious application, the hackers were able to obtain confidential company information, such as profiles and keys, which gave them access to the company’s infrastructure and enabled them to steal funds.
How can social engineering attacks be defended against?
Blockchain users should follow certain precautions to avoid social engineering attacks, such as:
Private keys and seed phrases should never be disclosed to external parties, as reputable organizations will never request them.
Be aware of unsolicited offers and investment possibilities, especially if they seem to be offering unrealistic profits.
Before proceeding with any action, confirm the legitimacy and authenticity of the material by consulting a number of reliable sources.
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