SIM Swapping Hack Proves Latest Threat in Cryptocurrency Theft

For all the excitement and possibilities that come with cryptocurrencies, there’s also been a fair number of frustrations. Looking past the price volatility that’s sunk many investors’ accounts, hacking has also proven to be a problem for crypto holders. Adding to the issue, there’s little recourse hacking victims can take should their wallets be breached. As CNBC reports, the latest crypto hacking scheme is what’s known as SIM swapping.

The process of SIM swapping involves gaining access to a phone number, which in turn could grant hackers access to cryptocurrency holdings. Last week one SIM swapping victim filed suit against AT&T saying the provider is culpable in a cryptocurrency theft that left him $24 million lighter. In his $224 million suit, Michael Terpin said the provider’s actions were aking to, “a hotel giving a thief with a fake ID a room key and a key to the room safe to steal jewelry in the safe from the rightful owner.” Meanwhile AT&T fired back, saying “We dispute these allegations and look forward to presenting our case in court.”

Although providers often ask for user information in order to execute the porting of phone numbers and data, a lot of the required information — including birth dates, social security, etc. — can be found on the so-called dark web. Making matters worse, once hackers gain control of an individual’s phone number, they’ll be able to get passed many two-factor authentication hurdles that secure sites. As a result, it can be extremely difficult if not impossible for the rightful owner to regain access to their account.

Speaking to CNBC, Multicoin Capital managing partner Kyle Samani explained, “In online banking, if someone gets into your account there’s ways to get the money back. In crypto, if hackers get access to your private keys, they own your money and you’re screwed.” Because of this reality, security experts are now advising investors to treat their phone numbers like their social security numbers in terms of privacy. Actually, Abra CEO Bill Barhydt says, “Your phone number right now is a lot more important than your social security number. The average consumer doesn’t pay attention to security until they’ve been hacked.” For the record, Abra says it doesn’t store any of its customer funds online, making them harder to hack.

According to Coindesk, cryptocurrency losses due to hacking totaled $1.6 billion as of June. Unfortunately SIM swapping is just one of many threats affecting crypto investors and others. For that reason it’s important for individuals to remain vigilant about security and prevent becoming vulnerable to attacks. From changing your phone number to considering “cold storage” (the practice of keeping your crypto offline), now’s the time to ensure you’re protecting yourself from potential cryptocurrency thieves. For those interested in the specifics of security, you might want to checkout this guide on how to secure your cryptocurrencies.

This is just one of the threats in dealing with cryptocurrency, but unfortunately as of now all we can do is be extra careful with our information that might be used to hack our accounts.

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Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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