Written By: Oplink.net | Last Updated: July 2022
Cryptocurrency has become increasingly well known in recent years, but this boost in exposure has brought an increase in something less welcome: fraud.
Cryptocurrency fraud is on the rise. The last few months has seen a marked increase in the amount of digital currency being stolen. Several cryptocurrency fraud cases have hit headline news, with one even becoming the subject of a documentary by Netflix, entitled Trust No One: The Hunt for the Crypto King. Another case to hit mainstream media saw hackers take $600 million in a single heist.
Hackers are now adopting increasingly advanced techniques to steal considerable sums of money, and users are more and more likely to become victims of this crime as time goes on.
We have done some research to highlight the cryptocurrency wallets that are most likely to be hacked – and those that appear to be the most secure.
In order to do this, we analysed conversations on Reddit to find out what users think about cryptocurrency crime. In this research, we paid particular attention to the currencies being talked about most, and those that had attracted the least attention from concerned users. The data reveals what public opinion really says about the safety of crypto wallets.
Crypto theft is on the rise
In the first four months of this year, almost as much cryptocurrency was stolen as in the entirety of 2021. Blockchain market analysts Chainalysis reported that thieves and fraudsters stole $3.2 billion in 2021, while the first four months of 2022 alone saw $2.9 billion taken from unwitting victims.
This year has seen a number of high-profile instances of cryptocurrency fraud. In March, blockchain network Ronin announced that 173,600 ether tokens – the Ethereum blockchain currency – and 25.5 million USD Coin tokens had been taken by criminals. In monetary terms, this equated to over $540 million, but by the time the crime had been announced the value of lost assets had increased to $610 million.
The single biggest cryptocurrency heist in history occurred in August 2021, when hackers walked away with $610 million worth of cryptocurrency, stolen from the Poly Network. But in this case, the funds were returned by the hackers just days later. It was claimed that the hackers had merely wanted to shine a light on security flaws on the platform.
The bankrupt crypto exchange FTX found itself the latest target of theft in early November 2022. The event occurred shortly after FTX filed for bankruptcy and saw over $600 million in various cryptocurrencies leave the exchange – with no explanation. Though it transpired that some of the withdrawn funds were taken by FTX as part of the bankruptcy proceedings, close to $500 million was still syphoned off through ‘unauthorized transactions’.
A hack was confirmed through the FTX Support Telegram group, who put out the following statement warning users to delete all associated apps: “FTX has been hacked. FTX apps are malware. Delete them. Chat is open. Don’t go on FTX site as it might download Trojans,”
This latest hack had a knock-on effect on the market, with FTX’s native FTT as well as Bitcoin both falling significantly as a result. FTX themselves are also now at the receiving end of an investigation into possible mismanagement of funds.
What are Crypto Wallets?
The most commonly used crypto wallets include the likes of Coinbase Wallet – Best for beginners, Electrum, Mycelium, Ledger Nano X, Exodus, MetaMask and Crypto.com. Wallets like these are vital for those looking to use cryptocurrencies. They enable users to easily buy, trade and sell their digital currency, and they’re used to securely store cryptocurrency.
Cryptocurrency wallets can contain considerable sums of money, so of course they are at risk and must be properly secured. Think of a cryptocurrency wallet like a banking app, it must have a good level of security to keep funds protected.
There are a number of distinct security risks associated with cryptocurrency wallets. These include:
Deanonymization: Cryptocurrency is well known for being anonymous, yet deanonymization is a concern with crypto wallets. Users’ names, IP addresses and other personal details can be uncovered by criminals if wallets do not have sufficient security.
Authentication risks: Crypto wallets don’t always have brute force protection, meaning that users could find their accounts hacked if a device with a crypto wallet installed is left unattended, or stolen.
Platform limitations: Applications that run on the internet will always carry a degree of risk, whether they’re designed to work on mobile devices or desktops. Crypto wallets can be compromised if users don’t install the recommended security updates for their browser, or don’t choose a sufficiently strong password.
User errors: Mistakes made by crypto wallet users can also compromise their security. If a user misplaces a device containing sensitive information, or unwittingly transfers funds to a fraudulent account, they may find themselves a victim of cryptocurrency crime.
Reddit users and crypto conversations
Reddit users were quick to discuss incidents of cryptocurrency fraud throughout 2021 and in the first half of 2022. Analysis shows that the digital currency was the most talked about subject on the platform in 2021, with 6.6m mentions of cryptocurrencies during that period.
While topics such as gaming and sports were also popular on Reddit throughout 2021, they couldn’t compare to the interest generated by digital currencies. And users didn’t fail to notice the high volumes of cryptocurrency that were being taken by criminals in 2021. Many discussed high profile cases such as the heist on Ronin in March 2021, and the huge attack on the Poly Network last August.
Cryptocurrency wallets associated with hacking, according to Reddit
To learn more about how fraud has been impacting crypto investors, we decided to analyse threads on Reddit to see which well-known wallets are being mentioned in discussions around fraud and theft.
Our research includes four popular cryptocurrency wallets – Coinbase.com, Crypto.com, Trust Wallet and Binance – and their mentions on the social network platform in posts which also include the following words; ‘stolen’, ‘theft’ and ‘hacked’. We then compared the number of users of each wallet service with the number of negative discussions on Reddit.
According to our data, Trust Wallet was most commonly associated with conversations around theft and hacking based on the number of mentions and users. As of last year the app – which was founded five years ago – has 10 million users, acquiring 3 million of these between April 2021 and April 2022 alone.
Trust Wallet has the fewest number of users out of the four wallets that were analysed, which means the percentage of negative sentiment tweets are higher than the others included.
Taking into account its number of worldwide users, Crypto.com is the wallet least associated with negative Reddit conversations surrounding crypto-theft, fraud and hacking. Based in Singapore, crypto.com has 50 million users, exchanging more than 250 different currencies. Investopedia describes it as “a good platform for active traders and anyone interested in using crypto as an actual currency, not just an investment” which may be the reason why fewer people are turning to Reddit to air their issues with it.
Based on the percentage of mentions of the four analysed cryptocurrency wallets in negative sentiment threads, against their respective number of users, the most to least negative are:
- Trust Wallet (10 million users): 0.006%
- Coinbase (43 million users): 0.003%
- Binance (28.6 million users): 0.002%
- Crypto.com (50 million users): 0.001%v