The cryptocurrency industry had a turbulent second quarter, with approximately $572.68 million lost to hacks and scams, a significant increase from previous periods.
The increase in losses represents a 70.3% increase from the first quarter and an alarming 112% increase year-on-year, illustrating a growing trend in vulnerability of digital assets.
Analyze major incidents and security breaches
Data From security services and bug bounty platform Web3, Immunefi paints a grim picture of the current state of cryptographic securityhighlighting the urgent need for enhanced protection measures across the sector.
In particular, centralized financing platforms (CeFi) suffered the brunt of these attacks, representing 70% of total losses. This change indicates a worrying trend as attackers target these institutions on decentralized finance (DeFi) networks, which were previously more affected.
The largest incidents included a $305 million exploit from Japanese cryptocurrency trading platform DMM Bitcoin and a $55 million theft from Turkish cryptocurrency exchange BtcTurk.
Additionally, May turned out to be the most difficult month of the quarter, with the highest losses at $358.5 million. Despite this substantial financial damage, there was minor victoriessuch as the recovery of $28.7 million, which represents only 5% of the total stolen in the second quarter.
These recoveries occurred in four notable exploits: Bloom, ALEX Lab, Gala Games, and YOLO Games. Mitchell Amador, founder and CEO of Immunefi, highlighted the “devastating” impact of infrastructure compromises, noting that such breaches could result in significant financial losses, especially when CeFi infrastructure is involved.
The predominant mode of loss was hacking, accounting for 98.5% of total financial damages across 53 incidents. In contrast, fraud, scams and carpet thefts accounted for only 1.5% of losses, but occurred in 19 incidents.
This disparity highlights the technical complexity and scale of the hacks compared to traditional deceptive practices within the cryptocurrency industry.
Targeted networks and emerging threats
Ethereum and BNB Chain were the most targeted networks during the quarter, continuing the trend of the first quarter. Ethereum saw the highest number of individual attacks, with 34 incidents accounting for 46.6% of total on-chain losses, followed by BNB Chain with 18 incidents.
This targeted assault on important networks highlights the need for continued vigilance and enhanced security protocols within these ecosystems.
In addition to these direct financial threats, the rise of deep fake technology presents a new frontier in crypto-related scams. Bitget Research recently projected that losses from massive scams could reach more than $25 billion by 2024.
Have you ever been involved in a deepfake crypto scam?
Bitget Research just released a report highlighting that Deepfakes could reach 70% of crypto crimes within two years and that annual losses caused by crypto deepfakes could reach $25.13 billion by the end of 2024. pic.twitter.com/xnwj7xFLOy
– Bitget (@bitgetglobal) June 27, 2024
These sophisticated programs often use fake projects, phishing attacks and Ponzi schemes, leveraging deep fake technology to create an illusion of credibility and deceive investors.
Featured image created with DALL-E, chart by TradingView
