De.Fi Reports $2B Loss in Crypto to Hacks and Scams in 2023
- Crypto Losses to Scams and Hacks Amount to $2 Billion in 2023
- Security Risks in the Crypto Industry
- Reduced losses and reasons
- Market trends and recovery rate
- Losses by Blockchains
- Ethereum
- BNB Chain and Others
- Prevalent Methods of Crypto Theft
- Access Control Exploits
- Flash-loan Attacks
- Exit Scams
Crypto Losses to Scams and Hacks Amount to $2 Billion in 2023
In 2023, cryptocurrency users experienced losses of nearly $2 billion to scams, rug pulls and hacks, a figure roughly equivalent to half of the previous year's losses. Despite this reduction being primarily due to the implementation of enhanced security protocols, the crypto industry still faces potential security risks.
Security Risks in the Crypto Industry
Reduced losses and reasons
The evidence of decrease in losses, as per an annual report by security application De.Fi, is largely attributed to improved security measures, increased community awareness, and overall reduced market activity. The decrease becomes even more significant when considering the $40 billion, which was lost due to the collapse of stablecoin issuer Terraform Labs, crypto lender Celsius and the FTX$3.28 -5.38% exchange.
Market trends and recovery rate
The dip coincides with a bear market phase where several major alternative tokens witnessed a slump, dropping by as much as 85% from their 2021 peak values. However, a recovery was seen over the past few months as the market conditions turned more bullish. De.Fi also reported that the recovery rate of funds has improved considerably, rising to around 10% from a mere 2% in 2022.
Losses by Blockchains
Ethereum
Ethereum$2,315 -2.42%, the largest blockchain in terms of active users and value locked, suffered the most significant losses, with around $1.35 billion wiped out in approximately 170 incidents. The large losses reflect Ethereum's attractiveness to malicious actors due to its expansive ecosystem and high-profile projects. The most considerable exploit was the $230 million attack on the cross-chain platform Multichain$1.85 -0.21% in July.
BNB Chain and Others
BNB$312 -5.65% Chain also drew attention as a lucrative target, losing $110.12 million across 213 incidents. Newer networks like zkSync Era and Solana$104 5.03% weren't spared either, losing $5.2 million in two incidents and $1 million in a single attack respectively. Centralized platforms such as exchanges and trading platforms recorded losses of approximately $256 million across seven cases, with November's attack on Poloniex accounting for a substantial $122 million.
Prevalent Methods of Crypto Theft
Access Control Exploits
Access control breaches were the most damaging, with malicious parties exploiting weaknesses in the management of permissions and access rights within smart contracts or platforms. Such exploits, granting unauthorized access to funds or vital functionalities, resulted in losses exceeding $852 million in 29 instances.
Flash-loan Attacks
Flash-loan attacks, which led to $275 million lost over 36 cases, were the second-most cash-generative technique. These attacks take advantage of the uncollateralized loan feature in decentralized finance (DeFi), enabling attackers to borrow substantial amounts of cryptocurrency without upfront capital, manipulate market prices and exploit DeFi vulnerabilities.
Exit Scams
Exit Scams resulted in losses of $136 million across 263 cases. In these scenarios, a dishonest developer drains all liquidity from a token they've issued or disappears from online platforms after acquiring money from unsuspecting market participants.
How do you like the article?
Join the discussion on
You may also like