Crypto’s cybersecurity crisis

If you had to explain today’s financial system to someone from 100 years ago, you’d probably lose them somewhere between “dog-themed digital currencies” and “internet bank robbers.”

Over the long Labor Day weekend, hackers put in some serious overtime, withdrawing 4,000 bitcoin worth a combined $320 million from bitcoin platform Liquid Network. The haul represented about 95% of the bitcoin held in the network’s federation wallet.

The attackers claimed to be “white-hat” hackers, or people who break into systems to expose security flaws rather than steal for profit. They eventually returned about 3,400 bitcoin, while keeping a modest $47 million for their troubles.

The cracks around the chain

One of crypto’s biggest selling points is decentralization—that transactions can happen without relying on a bank or any other central authority. But making those decentralized networks actually useful has required a growing layer of crypto infrastructure that allows people to move assets between platforms, and every new connection creates another potential opening for hackers.

That’s becoming especially clear with bridges and cross-chain infrastructure, which connect different blockchains. There have already been 26 attacks on those systems this year, up from just three in 2025, according to Bloomberg. And even a security audit is no guarantee: CoinGecko found that 60% of hacked crypto platforms had previously completed an independent audit assuring them they were safe.

Mo’ money, mo’ problems

This is an especially awkward time for crypto to have a security problem.

Digital assets have spent the past few years inching closer to mainstream finance. A group of 21 major financial institutions—including Bank of America, Citi, Goldman Sachs, and Wells Fargo—recently said it plans to launch a dollar-backed stablecoin venture in the first half of 2027 and will establish a company to support it. Capitol Hill is also continuing to work toward clearer rules for the industry with the CLARITY Act.

But as more Wall Street money moves in, the tolerance for security failures gets smaller. If hacks keep exposing weak spots, institutions could demand tougher safeguards before committing more capital—potentially slowing crypto’s march into the mainstream.

For investors, that means the winners might not be only the companies attracting crypto money, but the cybersecurity firms building the locks around it.—SY