Whoever Holds the Keys Holds the Coins
Crypto hacks took $3.4 billion in 2025, with the $1.5 billion Bybit breach alone accounting for 44%, while attacks on individual wallets rose. The difference between hot and cold wallets, and the habits that protect your coins.
By the UISC BD Editorial Desk · United Information Service Center · Published 13 September 2026 · 7-minute read
This article explains crypto security basics. It is general information, not financial or investment advice.
In traditional banking, a bank error or a stolen card can often be reversed. In crypto, whoever controls the private key controls the funds, and a confirmed transfer generally cannot be undone. Security is not a feature you buy; it is a set of habits.
The Scale of Theft
According to Chainalysis, crypto hacks totalled $3.4 billion in 2025.
- The Bybit exchange breach on 21 February 2025 took nearly $1.5 billion in ether — around 44 percent of the year's total and the largest digital heist in crypto history.
- Hackers linked to North Korea stole $2.02 billion in 2025, including the Bybit theft, attributed to a group known as TraderTraitor.
- North Korean attacks made up a record 76 percent of service compromises.
- The top three hacks represented 69 percent of losses from services.
Chainalysis also reported that attacks on individual wallets were rising. Exchanges are not the only target.
What a Wallet Actually Holds
A crypto wallet does not hold coins. The coins exist on the blockchain. A wallet holds the private keys that prove you can move them.
Most wallets generate a seed phrase — usually 12 or 24 words — from which all the keys can be recreated. Anyone with that phrase can take everything. Anyone who loses it, with no backup, may lose access forever.
Hot Wallets
A hot wallet is connected to the internet: a phone app, a browser extension, or an account on an exchange.
Strengths: convenient for frequent transactions and trading.
Weaknesses: exposed to malware, phishing sites, malicious browser extensions and compromised devices. On an exchange, the exchange holds the keys — which means its security, not yours, protects the funds.
Cold Wallets
A cold wallet keeps private keys offline. The most common form is a hardware wallet, a small device that signs transactions without exposing the keys to the connected computer.
Strengths: far harder to attack remotely.
Weaknesses: less convenient, and the physical device and seed phrase must be protected from loss, damage and theft.
A Sensible Split
Many holders use both: a small hot-wallet balance for spending or trading, and the bulk in cold storage — the way people keep some cash in a wallet and savings elsewhere.
Habits That Prevent Most Losses
- Never type your seed phrase into a website, app or message. No legitimate support agent will ask for it.
- Write the seed phrase down offline and store it securely. Do not photograph it or save it in cloud notes.
- Buy hardware wallets only from the manufacturer or an authorised seller — never second-hand.
- Check the address before sending. Malware can swap a copied address for the attacker's.
- Use an authenticator app, not SMS, for exchange accounts.
- Be suspicious of "wallet verification" or "airdrop claim" links. They are a common way wallets are drained.
- Test with a small amount first when sending to a new address.
The Exchange Question
Leaving funds on an exchange means trusting its security and solvency. Regulation is increasingly setting standards for how providers operate — in the European Union, MiCA now requires licences — but regulation does not make a hack impossible, as Bybit showed.
Holding coins yourself removes that dependency and adds responsibility. A regulated fund such as a spot Bitcoin ETF removes both the keys and the responsibility, at the cost of not owning coins directly. There is no option without trade-offs.
Related reading
- FBI: $11.4 Billion Lost to Crypto Scams in 2025, Over Half of All Fraud
- What Moves Exchange Rates, and Why the Fed's 16 September Decision Matters
- Pig Butchering Scams: The Long Con Now Run by AI
- Bitcoin ETFs Explained: $5.4bn Out in Six Months, $3.5bn Back in August
Sources
- "Crypto hacks hit $3.4 billion in 2025, attacks on individual wallets rise: Chainalysis," The Block — theblock.co
- "North Korea-linked hackers steal $2.02 billion in 2025, leading global crypto theft," The Hacker News — thehackernews.com
- "Collaboration in the wake of record-breaking Bybit theft," Chainalysis — chainalysis.com
- "Crypto theft in 2025 concentrated in fewer, larger breaches," BankInfoSecurity — bankinfosecurity.com
