New data shows that crypto scam and hack losses in the first half of 2023 were down a whopping 75% from the same period last year. A recently released report by Beosin, a blockchain security firm, revealed that the total value of cryptocurrencies lost in scams, hacks, and rug pulls targeting Web3 platforms reached $656.61 million during the first half of 2023. For comparison, $1.9 billion was lost to Web3 scams in the same quarter last year.
DeFi Platforms Remain The Most Frequent Target
Decentralized finance (DeFi) platforms were hit the hardest by scams and hacks in the first half of 2023. Decentralized finance aims to disrupt traditional financial institutions, but with its anonymity and lack of regulation also come more opportunities for fraud. The total loss from 85 DeFi security breaches reached $292 million, accounting for 62% of the total losses.
Criminals are known for always exploiting vulnerabilities in unaudited smart contracts to drain funds, but the number of cases has reduced dramatically. As a result, hackers taking advantage of smart contract vulnerabilities resulted in a loss of $264 million, accounting for 56% of the total losses.
On the other hand, phishing scams and rug pulls were more frequent. Around $108 million was lost due to victims falling victim to phishing scams, while approximately $75.87 million was lost due to victims falling victim to rug pull scams.
However, the reduction in total money lost in the first half this year is great news for crypto investors and the industry in general. Less money stolen means more money in the pockets of honest traders and holders.
Ethereum Remains The Biggest Blockchain Target
Due to the considerable number of Web3 projects on Ethereum, the blockchain has been a major target for scams and hacks in the crypto space. Unfortunately, that trend continued into the first half of 2023. While the total value stolen from Ethereum scams and hacks fell compared to 2022, it still represented the majority of funds stolen in the crypto sector.
In total, 75.6% of the loss amount came from Ethereum, coming up to approximately $356 million. With 58 cases, the BNB Chain had the highest number of recorded attacks, which accounted for 53.7% of all security incidents.
Total market cap holding above $1.6 trillion | Source: Crypto Total Market Cap on TradingView.com
Improved Security Measures
Beosin’s report paints a picture of the current perspective of the cryptocurrency industry. It shows that Web3 projects have really stepped up their security game, and the crypto community has gotten smarter about security best practices.
Professional smart contract auditing has increased, although approximately 49% of the attacked projects had not undergone an audit.
Some of the biggest attacks were the $197 million breach on Euler Finance, the $67 million stolen from Atomic Wallet, and the MEV sandwich attacks resulting in a total loss of approximately $25 million.
About $113 million was sent to Tornado Cash and other mixers, while $215 million was recovered from attackers.
Featured image from Unsplash, chart from TradingView.com