This is a warning lesson for those who are tempted to leave the entirety of their crypto holdings on a centralised exchange.
By their very nature, crypto exchanges attract a lot of attention from hackers. Typically only a small portion of the total cryptos deposited are held in a hot wallet, with the rest held in an offline cold wallet. Only the hot wallet can be hacked, but that is a large enough honey pot to attract scumbags and thieves, especially those sponsored by the governments of Iran, Russia, and North Korea.
Mt. Gox Hack
An early mover in the centralised crypto exchange world, Mt. Gox was launched in July 2010. At the start of 2014, this exchange was handling 70% of all BTC transactions. In February 2014, Mt. Gox announced it had lost 850,000 BTC belonging to its customers — worth $450mm at the time. The coins were stolen from the hot wallet over 2012 and 2013. The exchange filed for bankruptcy in April 2014.
Bitfinex
With the demise of Mt. Gox, Bitfinex became the largest bitcoin exchange. They lost 1,500 BTC to a hack in May 2015, were fined by the US CFTC in June 2016, and had $72mm in BTC stolen in August 2016. Bitfinex is still active. We don't understand why anyone would use them.
There are many more exchange hacks — far too many to list. The lesson is clear: never leave more crypto on an exchange than you need to for active trading purposes.
Please feel free to contact us with any questions.