Researchers from Chinese cybersecurity company Qihoo 360 Netlab have identified one of the largest cryptocurrency hacks in recent memory. According to Crypto Globe, the firm has pinpointed a theft of ether worth roughly $20 million as of this writing. One of the most perplexing and aggravating aspects of the theft, aside from its magnitude, is the fact that Chinese cyber-security company Qihoo's researchers identified an earlier hack back in March that may have helped to pave the way for this large-scale theft.

Insecure Ethereum Node

The hackers involved in this theft capitalized on a lack of security in certain ethereum  nodes running a client known as Geth. In the recent hack, the thieves stole 38,642 ETH, worth about $20.5 million as of this writing. Geth is a client allowing individuals to run an ethereum node on the broader network, and the victims in this case were those who had failed to properly enable an interface called JSON-RPC on Geth. This interface allows users to remotely access the blockchain, sending transactions between accounts which have been unlocked

This particular security vulnerability has long been known by the broader ethereum and cryptocurrency communities. Indeed, the ethereum development team pointed it out three years ago.

Hackers Searched Network for Insecure Nodes

Back in March, 360 Netlab identified instances of hacking in which potential thieves scoured the ethereum network for nodes that had failed to close off their JSON-RPC port 8545, thereby leaving themselves open to security breaches. At the time, the researchers documented a very small theft amounting to just 4 ETH. Just a few months later, though, this small theft had turned into a very large one. It's likely that there are other attacks that have taken place based on the security flaws in the Geth client as well. Nonetheless, some users remain unaware of the risk or perhaps unable to complete the upgrade necessary to address the security issue. As long as that remains the case, it's likely that teams of cybercriminals will continue to search for ways to steal ether from the broader network. The best thing that ethereum investors can do is to spread word about the security vulnerability so that node operators become aware of how to address the concern.

Investing in cryptocurrencies and Initial Coin Offerings ("ICOs") is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.

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