The recent Bitcoin scam that was behind the hacking of Twitter could have been far worse if cryptocurrency exchanges had not stepped in.
Overall, criminals still managed to net roughly US$120,000 [AUS$170,000] before the scam was shut down.
Orchestrated Bitcoin scam
Last week, hackers managed to gain control of quite a few Twitter accounts of celebrities, figures of the industry, and major corporations. Some of those who had their accounts taken over include Elon Musk, Bill Gates, Mike Bloomberg, Apple, Kim Kardashian, and Barack Obama.
The scam worked in the following manner. The social media accounts posted a Bitcoin address with the message saying people who sent BTC to that address would get double the amount back.
The result was predictable. Those that sent their BTC to the address got nothing in return. Twitter eventually managed to regain control of the affected accounts.
Crypto exchanges step in
The losses suffered by victims of the Bitcoin scam could have been worse. A number of cryptocurrency exchanges (Coinbase, Kraken, Gemini, and Binance) quickly flagged the address associated with the scam and prevented their users from sending BTC to it.
Philip Martin, Coinbase chief information security officer, told Forbes that 14 users sent about US$3,000 (AUS$4,269) in BTC to the address before the exchange cut off access. Overall, Coinbase kept 1,100 users from losing US$280,000 (AUS$398,000) to the Bitcoin scam.
Kraken CEO Jesse Powell said, “This hack shows that security is about layers of protection. Somebody has to be watching the admins and setting up alerts to watch for these vulnerabilities.”
Powell added, “The Twitter hack was a more widespread event, but scams of this nature are not new. Kraken proactively monitors for this type of activity and blocks certain addresses that we come across. Like any other scam, we proactively blocked the addresses from the Twitter hack earlier this week.”
Martin addressed concerns that exchanges could move to stop Bitcoin transfers for things they consider undesirable. He said that the main concern of Coinbase is to help “avoid people having money stolen when it’s in our power to prevent it.”
He added, “The principle that we want to pay attention to is harm reduction without reducing the underlying utility of the asset.”