Hackers Rocked the Crypto Space by Swindling $2 Billion in 2023; But There's Good News too
Crypto exchanges crashing to reveal scams, major crypto heists, and investors falling for fake virtual assets have plagued the blockchain economy for past few years. In a year marred by financial instability and market fluctuations, the cryptocurrency world faced another significant blow with hackers swindling a staggering $2 billion in 2023. Despite this colossal figure, the amount stolen demonstrated a notable decrease compared to previous years, shedding light on both the vulnerabilities and improvements within the decentralized finance (DeFi) ecosystem.
Euler Finance hack and contagion effect
Among the notable incidents, the attack on Euler Finance, a non-custodial DeFi protocol on the Ethereum network, stood out as the largest, as hackers robbed more than $195 million in cryptocurrencies during the heist. This breach triggered a contagion effect, affecting at least 11 other DeFi protocols besides Euler. The interconnected nature of these platforms exposed the fragility of the DeFi ecosystem.
Top heists of the year
Among other crypto heists, Multichain suffered a loss of $126 million, followed by BonqDAO ($120 million), Polonoex ($114 million), and Atomic Wallet ($100 million). The report painted a grim picture of the challenges faced by the DeFi space throughout the year.
Persistent vulnerabilities in DeFi
The DeFi report emphasized the persistent vulnerabilities within the ecosystem, acknowledging that the dispersed nature of the stolen funds underscored ongoing challenges. Despite strides made in addressing these vulnerabilities, 2023 served as a testament to the need for continuous improvement in security measures. The report noted that the bear market in the first half of the year contributed to relatively muted interest in the DeFi space.
TRM labs corroborates findings
The findings of the DeFi report were supported by TRM Labs, which disclosed that $1.7 billion had been stolen in crypto by mid-December 2023. Despite potential additional hacks in December, the total losses were expected to be significantly lower than the previous year. TRM Labs emphasized the importance of global attention on cybercrime, suggesting that increased focus could help mitigate illicit activities and foster the growth of a predominantly lawful ecosystem.
Ari Redbord, global head of policy and government affairs at TRM, acknowledged the potential for a record-setting year with a major hack but highlighted the positive impact of the global cybersecurity focus.
Infrastructure attacks and trends
TRM Labs' analysis revealed that infrastructure attacks, particularly those involving private-key theft, constituted nearly 60% of the total stolen funds in 2023. These attacks, which grant hackers access to a crypto project's servers or software, have become a prevalent method for stealing funds and manipulating trades. The top 10 hacks accounted for almost 70% of all stolen funds, indicating a concentration of criminal activity within a limited number of high-impact breaches.
Inadequate security measures and the role of exchanges
As billions of dollars in crypto continue to be lost to hackers annually, experts point to inadequate security measures as a primary catalyst for the rising cases of incessant hacks. Crypto exchanges, in particular, remain prime targets for hackers employing advanced tactics such as phishing schemes, fake websites, and posing as legitimate crypto entities.