Learn from Coincheck’s $530m heist and ‘trust no one’ when dealing with cryptocurrencies, says Carbon Black security strategist

People who deal in cryptocurrency should protect themselves better with a cold wallet with at least one backup, said security strategist Rick McElroy.
Carbon Black

A hack of a Japanese cryptocurrency last Friday (Jan 26) which led to 260,000 customers affected by the heist of more than 500 million NEM coins, is a reminder that people should take precautions when protecting and using cryptocurrency.

Security strategist at US cyber security firm Carbon Black Mr Rick McElroy stressed in a statement to “trust no one” when dealing with cryptocurrencies.

In the latest and quite possibly biggest crypto theft ever, Japanese crypto exchange Coincheck lost some $530 million which surpassed the $400 million stolen in the Mt Gox heist of 2014. The Japanese authorities said on Monday (Jan 29) that all cryptocurrency exchanges in the country would be investigated for security gaps and it ordered Coincheck to raise its standards.

Mr McElroy said that that leaving your cryptocurrency in a hot wallet that is online and connected to the internet increases your vulnerabilities and almost ensures a loss when a hack occurs.

“People can protect themselves better with a cold wallet, such as storing cryptocurrency in a USB stick, with at least one backup. After all, this is money,” he said.

Mr McElroy has more than 15 years of information security experiencer educating and advising organisations on reducing their risk to security challenges. He has also held security roles with the US Department of Defense.

Most people, he said, have the misconception that cryptocurrency can be dealt with like any form of electronic data which can be stored in the cloud.

Mr McElroy said: “However, the difference is that theft of digital files such as photos is an inconvenience and embarrassment but in the case of cryptocurrency, a loss could financially eliminate you or your organisation (depending on what you provide for the crypto market).”