How Secure is Your House? How Secure is Your Crypto?

April 14, 2022
On March 29, news reports surfaced about the theft of $625 million in crypto currency from an online gaming platform. As if that’s not astonishing enough – the theft was perpetrated with nothing more than a stolen pass key.

According to Sky Mavis, the tech startup whose customers were victimized in the theft:

“The validator key scheme is set up to be decentralized so that it limits an attack vector, similar to this one, but the attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator.”

Got all that? Neither do we. And we certainly don’t claim to be crypto experts.

But the tech wonks who run Sky Mavis presumably are. Yet they still managed to enable a hacker to steal $625 million worth of crypto from their customers with nothing more than a pilfered pass key.

The Sky Mavis incident is just the tip of the iceberg. According to research firm Crystal Blockchain, there have been 226 hacking incidents since 2011 that resulted in the theft of a staggering $12 billion worth of crypto.

We come neither to praise crypto, nor to bury it – but to point out that there are significant risks inherent to virtual currencies and assets (like NFTs) that don’t apply to hard assets. Chief among those is the risk of theft that Sky Mavis customers experienced recently.

After all, there is no virtual “back door” to a bank vault or Fort Knox. There’s no way to virtually steal someone’s house. That is a risk uniquely inherent to virtual currencies and assets, and should be factored into any decisions about whether to invest in them.

Keep your assets safe and secure!  Sign up for 2-factor authentication on your investment and email accounts, remember to use a strong password, and do not click on links or attachments from senders that you do not recognize.

We appreciate our relationship with you and as always, we are here to help.
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