Shapeshift

ShapeShift, a cryptocurrency exchange platform, faced two damaging breaches in March and April 2016, resulting in the theft of approximately $230,000 USD in digital assets. The first incident, on March 14, saw a rogue employee steal 315 BTC from the exchange’s hot wallet, prompting a civil suit and police involvement, as detailed in a Reddit post by ShapeShift’s team. The platform continued operations, anticipating recovery of the stolen funds. A second, more complex attack occurred on April 7 during a site migration, compromising three wallets—97 BTC, 3,600 ETH, and 1,900 LTC—worth roughly $60,000 at Bitcoin’s price of $420, Ethereum’s $10, and Litecoin’s $3 per coin, per CoinGecko.

Initially unable to pinpoint the breach’s cause, ShapeShift took its systems offline, suspecting compromised infrastructure. Contact with the hacker revealed that the rogue employee had leaked critical information enabling the attack. ShapeShift rebuilt its platform on a new host, cycling all keys within 24 hours to restore security. Operating in the minimally regulated crypto landscape of 2016, the exchange maintained transparency via Reddit, but no recovery of the April funds was reported. The breaches exposed vulnerabilities in employee trust and hot wallet management, fueling calls for stringent access controls, multi-signature wallets, and insider threat monitoring to safeguard the evolving cryptocurrency ecosystem.