The crypto ecosystem has witnessed several hacks and exploits in recent years. These security challenges, including thefts, hacks, and fraudulent activities have damaged the reputation of the industry and hindered mainstream adoption.
According to a report by DeFi Security, crypto hackers, and scammers made off with $452 million in the first quarter of 2023. Although that is a positive drop from the $1.3 billion recorded in the first quarter of 2022, the stolen funds’ recovery rate was down too.
More on the crypto hack report
According to the DeFi Security report, nearly half of the losses this quarter ($215 million) occurred in the first three weeks of March.
Specifically, the Euler Finance and Bonq DAO exploits were the quarter’s loss leaders at $196 million and $120 million respectively. CoinDeal suffered a $45 million exploit, followed by the Monkey Drainer phishing scammers, who came in fourth, with $16.5 million lost.
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Although BNB Chain outnumbered the Ethereum network with the number of exploits, 18 compared to Ethereum’s 10, the Ethereum blockchain suffered the highest losses in dollar terms.
Totally, $130m was recovered out of $452 million stolen funds in Q1 2023, which marks a recovery rate of 28.7%. Recall that out of $1.3 billion stolen in Q1 2022, $520 million was recovered which signals a 40% recovery rate.
Out of the 49 theft cases that were in the report, six flash loan attacks accounted for the most significant losses at over $200 million, with Euler Finance representing the bulk of the total. The most common attack was smart contract exploits, which accounted for 17 incidents.
Notable hacks in Q1 2023
The most prominent of all attacks in the first quarter of 2023 was the Euler Finance $196 million exploit. It happened on the 13th of March and it led to the loss of various cryptocurrencies worth millions of dollars. However, on March 25th, over 51,000 ether, valued at nearly $90 million was sent back to the Euler deployer contract. Subsequently, on March 27th, the hacker returned the additional $39 million in 3 transactions.
BonqDAO and AllianceBlock also suffered a $120 million loss on February 2 due to a vulnerability in the BonqDAO smart contract. The exploit forced the suspension of trading and liquidity to prevent the stolen tokens from being converted into other assets. The Bonq protocol has also since been suspended, and the team is currently working on a solution to enable users to withdraw the remaining collateral.
Lastly, Platypus Finance, an automated market maker (AMM) offering stable swap opportunities, fell victim to a flash loan attack of $8.5 million. The perpetrator exploited several asset contracts within the protocol using an unverified malicious smart contract and ultimately stole $8,500,887 in stablecoins.
Prevalence of scams in the crypto space
Perpetration of all forms of scams has become a global issue due to the worldwide spread of cryptocurrencies. Cybercriminals have adopted several techniques and the anonymous nature of blockchain technology allows a lot of criminals to get away with such schemes, These Cybercriminals have set their target on the crypto space, primarily because of its unregulated nature.
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It is important to take precautionary measures to prevent being caught up in any form of crypto scam. As the crypto ecosystem continues to gain scale and complexity, it will undoubtedly remain a top focus of scammers. By understanding the common ways scammers usually use to steal information and ultimately money; traders and investors would be able to spot crypto-related scams early and avoid falling victim.
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