- The Ronin bridge hack is a prime example of a blockchain security vulnerability losing US$600 million due to technical issues.
- Deus Finance, a decentralized finance protocol, suffered a cyber security breach on May 5th, resulting in a loss of $6 million.
- Within Q1 of 2023, crypto hackers have managed to steal over $320 million.
Blockchain security is among the few crucial pillars most new crypto traders are warned of. Aside from warning them of the dangers of high volatility within the market, we advise them to be careful where they trade. Digital currency security is fundamental, and its weight can easily sway the entire market. Thus cyber security within this sector is highly sought after. Unfortunately, after suffering immense losses, 2022 painted a dire picture for the franchise. Given the current trajectory of users and developers, 2023 may be a ray of hope.
Here is a look at how crypto hacks and scams have significantly reduced compared to the first quarter of both years.
Blockchain security disappoints in 2022
2022 is known as one of the worst years in crypto history. With crypto hacks highlighting most of the first few months of 2022 and FTX driving in the final blow, many traders lost hope for the industry.
According to Chainalysis, the entire market lost at least $3.8 billion in crypto hacks and scams. This represented a significant increase since 2021, up by 15%($0.5 billion). These crises highlighted some of the various fears and flaws of blockchain security in multiple organizations.
The effects were so severe that it significantly lowered Africa’s all-time crypto adoption rate of 1200%. When we walk down memory lane, we can highlight various flaws within older blockchain security versions.
One of Blockhain’s highest values is its immutable nature. Its unique design allows users freely interact with their users without fear of any alterations. This fact and its decentralized nature have significantly increased its cyber security against Web2 threats.
Also, Read A benchmark for blockchain networks: Cyberpunks lose 5, 2.5 ETH in a NEAR Protocol hacking attempt.
Unfortunately, this very nature has been its undoing. After a developer launches a blockchain system, they cannot alter it. Due to this, most blockchain security systems have underlying zero-day vulnerabilities. Zero-day vulnerabilities are often cumbersome to detect, even for web2 cyber security.
Unfortunately, blockchain security is not immune to this field, and thus, various crypto hacker prowl within a decentralized network to find any hint of vulnerability.
Crypto hacks that devastated the market
North Korean government-linked cybercrime group Lazarus Group are notorious among crypto traders. According to Chainalysis, they are linked to prominent crypto hackers and blockchain security breaches, estimating a loss of at least $1..7 billion in 2022.
The Ronin bridge hack is a prime example of a blockchain security vulnerability. According to investigators, the crypto hackers gained access to internal validator systems and stole over $600 million in user funds. The Wormhole Bridge exploit also ranks amongst this category losing over $321 million worth of crypto coins due to a vulnerability in the protocol’s smart contracts.Aside from technical vulnerabilities, user ignorance is also a significant factor that plagued digital currency security. Numerous crypto traders fall for social engineering or scammers or unknowingly set off a threat after clicking on various links. Africa is prone to such circumstances as South Africa has suffered heavily and caused numerous crypto hacks through social engineering and scams.
Both these factors have left scars as 2023 struggles o regain its former glory. Fortunately, despite the FTX scam brings in the crypto market to its knees, blockchain security administrators, crypto law regulators and Crypto traders have all learnt valuable lessons.
2023 sees a slight improvement in Blockchain security.
2023 kicked off with a meagre count; many crypto exchanges shut down due to heavy losses. Most crypto traders worldwide stepped back and regularly tightened their grip on crypto law. Fortunately, crypto hacks are common thing, and their perpetrators are relentless. Within Q1 of 2023, crypto hackers have managed to steal over $320 million.
According to blockchain security firm Certik, crypto traders lost $31 million to 90 exit scams and $222 million to 52 flash loan and oracle manipulation exports. The crypto hacks also found their doorsteps to Binance and Ethereum, showcasing that hackers are relentless.On April 2023, the Bitrue exchange fell prey to a massive crypto hack causing a loss of at least $23 million in Ethereum, Gala and other cryptocurrencies. Despite Bitrue exchange pricing its cyber security, it still fell prey to an exploit within its hot wallet system. This indicated that they gained access to their blockchain security and accessed one of the exchange’s hot wallets, which held 5% of its total assets. Technical flaws are still the main adversary of digital currency security.
Within the same month, various crypt whales and early investors lost $1 million from 11 different blockchains. These crypto hacks significantly hinged on specific crypto traders and exploited sevral vulnerabilities. According to experts, they used the open-source multi-sig contract to secure assets. The attack bypassed set blockchain security controls allowing hackers access to critical private keys, thus draining their funds.
Deus Finance, a decentralized finance protocol, suffered a cyber security breach on May 5th, resulting in a loss of $6 million. Crypto hackers found a vulnerability within their stablecoin DEI. The hack began on the BNB Smart Chain and targeted the Aribitrum Network, where ARB/ETH deployment lost over $5 million last year.
Trust Wallet users suffered a sophisticated social engineering scam that drained their wallets. Hackers deceived the users into revealing sensitive information, thus giving them free rein over their accounts. The hack resulted in a $4 million loss that devastated the crypto market. This heavily highlighted how crypto traders could be a very threat to digital currency security. Scammers have rebranded their ways and appear as legitimate web3 investors or projects.
Finally, Kucoin, a prominent exchange, suffered at the hands of yet another crypto hack. This time the perpetrators opted to force users into a phone crypto gateway causing many to send funds to an unknown account. According to the reports, users lost at least $22,000, marking the lowest figure in 2023.
Ray of Hope
Despite the tragic losses suffered within the first quarter of 2023, it signifies an improvement. After the FTX crash, it became clear that crypt hacks and scams can occur at a much grander scale. Due to this, crypto traders have become more cautious about where they store their funding.
This sudden wave of caution s a double-edged sword since it means less business for those unable to prove their cyber security while indicating improvements in individual awareness. Comparing the Q1 of 2023 and 2022, there is a significant improvement in response time and blockchain security. Last year, the Wintermute hack supposedly existed before the hackers phoned many functions.
This indicated that administrators could not identify the evident flaws within their system. Fortunately, this fact is swiftly dealt with as blockchain security experts have increased their efficiency and response time. The Bitrue exchange swiftly shut down the exploit cutting it off and other suspects’ accounts from their funding.
This prevented further losses, and their ability to deduce affiliate accounts signifies improved skills. Crypto traders today are constantly advised to take better care of their crypto assets, highlighting that cold wallets are a better option. As a result, many crypto traders have opted for cold wallets since the beginning of 2023.
Crypto regulators have also taken a vital role in ensuring digital currency security. The SEC and other regulatory bodies have tightened the crypto laws highlighting that any breach of set guidelines will lead to severe fines.
2022 might have been a dark age for crypto traders, and it also awakened us. The crypto market is steadily rising, and more emphasis should be placed on cyber security. When properly fortifying existing blockchain security, we will experience fewer crypt hacks as the year progresses.