In the second quarter of 2023, the crypto sphere experienced a 65.3% year-on-year increase in the total number of cyber attacks, according to a new report from web3-focused bug bounty platform Immunefi, via The Block. This uptick underscores the growing interest in crypto and decentralized finance (DeFi) and the urgent need for effective countermeasures.
The Paradox Of Increased Attacks And Decreased Losses
It’s worth noting that despite increased attacks, the report revealed a significant drop of 60.4% in total losses compared to the same period in 2022. The losses amounted to about $265.5 million in Q2, contributing to over $702 million in losses year-to-date.
The attack orchestrated by the Lazarus Group, a cybercrime organization linked to North Korea, against the non-custodial Atomic Wallet and an exit scam at the erstwhile blockchain finance platform, Fintoch, were notable among these events.
The resulting damages from these two incidents were colossal, with Atomic Wallet and Fintoch enduring financial losses of $100 million and $31.6 million, respectively.
The most affected chains were BNB and Ethereum, while Arbitrum, having had no incidents in the same quarter last year, experienced a significant rise in targeted attacks. Hacks accounted for a chunk (83.1%) of losses in Q2, while frauds, scams, and rug pulls represented 16.9%.
The Rising Trend Of Rug Pulls
According to Immunefi’s CEO, Mitchell Amador, there has been an increase in rug pulls in terms of both stolen funds and the number of incidents. He stressed the importance of users assessing projects as bad actors expand their malicious activities and employ increasingly sophisticated scams.
Amador noted:
We have witnessed a considerable increase in rug pulls, both in terms of stolen funds and the number of incidents. As bad actors continue to expand their malicious activities and employ increasingly sophisticated scams, users must thoroughly assess projects.
Throughout the second quarter, DeFi platforms persisted as the primary victims of exploitations, with these infractions accounting for 86.1% of the overall financial damage, equating to approximately $228.5 million. The balance, which is 13.9% of the total losses, was endured by centralized crypto platforms. This underlines the ongoing security hurdles in the expanding DeFi industry.
Despite the surge in attacks, the report indicates only $10.5 million of stolen funds from eight incidents have been recovered, making up a meager 3.9% of the total losses in Q2. This underscores the difficulty of reclaiming stolen crypto assets, emphasizing the need for enhanced security measures and user vigilance in the crypto sphere.
The findings from Immunefi’s report underline the reality of the growing crypto industry, with increased adoption on one side and escalating threats on the other. The rapid evolution of the crypto landscape calls for the ongoing development of security solutions.
Meanwhile, over the past 24 hours, the crypto market has slightly declined. Notably, the global crypto market currently has a market valuation of $1.222 trillion at the time of writing.
Featured image from iStock, Chart from TradingView
