Why Are Wallets Usually Hacked or Bridged?

Cryptocurrency wallets are often targeted by hackers due to the decentralized and pseudonymous nature of blockchain technology, which makes it attractive for illicit activities.


Here are the main reasons why wallets are hacked or bridged, based on available information:

Private Key/Seed Phrase Compromise:

Phishing Attacks: Hackers trick users into revealing private keys or seed phrases through fake websites, emails, or apps mimicking legitimate platforms. For example, users might enter their details on a fraudulent wallet or exchange site.

Malware: Malware like keyloggers or clipboard hijackers can steal private keys or seed phrases when users copy-paste them. This is common on compromised devices.

Social Engineering: Scammers pose as support staff or trusted entities to extract sensitive information from users.

Weak Security Practices:

Poor Password Management: Using weak or reused passwords for wallet access or associated email accounts increases vulnerability.

Lack of Two-Factor Authentication (2FA): Not enabling 2FA on exchanges or wallets leaves accounts open to brute-force attacks.

Insecure Storage: Storing seed phrases digitally (e.g., in cloud storage or unencrypted files) or physically in easily accessible locations makes them susceptible to theft.

Bridge Exploits:

Smart Contract Vulnerabilities: Cross-chain bridges, which transfer assets between blockchains, often rely on smart contracts that can have coding flaws. Hackers exploit these to drain funds, as seen in major bridge hacks like the Ronin Network ($624M, 2022) or Wormhole ($325M, 2022).

Centralized Points of Failure: Some bridges use centralized components (e.g., multisig wallets controlled by a few parties), which hackers target if they gain control of enough keys.

Fake Bridges: Scammers create fraudulent bridge platforms to steal assets when users attempt to transfer funds.

Exchange Hacks:
Many users store funds in custodial wallets on exchanges, which are prime targets due to their large asset pools. Weak exchange security, insider threats, or API key leaks can lead to mass wallet compromises.

Example: Historical hacks like Mt. Gox (2014) or smaller exchange breaches show this risk.


DeFi Protocol Exploits:
Wallets interacting with decentralized finance (DeFi) platforms can be drained if the platform’s smart contracts are exploited or if users approve malicious transactions (e.g., unlimited token allowances).

Rug pulls, where developers abandon a project and steal funds, also affect connected wallets.

Human Error:

Approving Malicious Transactions: Users may unknowingly sign transactions that allow hackers to access their funds, often through fake dApps or token approvals.

Lost Recovery Options: Losing access to seed phrases or private keys without proper backups can lock users out, though this isn’t a hack, it’s often conflated with security issues.

Network and Device Vulnerabilities:
Unsecured Networks: Using public Wi-Fi or compromised routers can expose wallet data.

Outdated Software: Running outdated wallet software or operating systems can leave users open to known exploits.

Prevention Tips:

Secure Private Keys/Seed Phrases: Store them offline (e.g., on paper or hardware wallets) and never share them.

Use Hardware Wallets: Devices like Ledger or Trezor keep keys offline, reducing hacking risks.
Enable 2FA: Use authenticator apps or hardware-based 2FA, avoiding SMS-based options.

Verify Platforms: Double-check URLs and avoid clicking suspicious links. Use official apps or websites.

Audit Smart Contract Interactions: Check token approvals and revoke unnecessary ones using tools like Etherscan or revoke.cash.
Update Software: Keep wallet apps, browsers, and devices updated.

Be Skeptical: Avoid unsolicited offers, giveaways, or “support” messages asking for sensitive information.

Research Bridges: Use well-audited, reputable bridges and check their security history.