The increasing threats in the crypto sector come out as one of the major disadvantages highlighted by the regulators. Notably, a recent report claims that over millions has already been lost to those with criminal intent in the crypto sector.
According to a report released by Web3 security firm Beosin on Friday, the total value of cryptocurrencies lost in scams, hacks and rug pulls amounted to $656 million during the first half of 2023. Amongst the reported losses, it includes the loss of $471.43 million in 108 protocol attacks, $108 million in various phishing scams and $75.87 million over 110 rug pulls.
A rug pull is a scam where a cryptocurrency or NFT developer hypes a project to attract investor money, only to suddenly shut down or disappear, taking investor assets with them.
While the reported losses are significant, they represent a significant decrease over the first half of 2022 and the second half of 2022, where $1.91 billion and $1.69 billion were lost, respectively. Additionally, among the reported losses, a certain sum has already been recovered which is significantly higher than the recovered amounts from last year. To this, Beosin analysts wrote:
Approximately $215 million of stolen assets were recovered, accounting for 45.5% of all stolen assets. In contrast, in 2022, only 8% were recovered. $113 million of stolen assets were transferred to mixers: $45.38M into Tornado Cash and $68.14M into other mixers.
Furthermore, according to the report, most of the stolen crypto was lost due to smart contract vulnerabilities (56%), while 21.4% had no clear identifiable reasons for the loss. Nevertheless, the numbers represent a significant decrease over the second half of 2021, when a record $2.1 billion in crypto was lost due to hacks, phishing scams and rug pulls.
In a dashboard compiled by Beosin and Footprint Analytics, only one project was hacked for more than $100 million, that being Euler Finance’s $195 million flash loan hack on March 13, the biggest attack this year. The thieves moved the stolen money to two new wallets, one of which contained DAI tokens and Ethereum (ETH) stablecoins. After a series of negotiations and mutual agreement, the firm opened redemptions on April 12 after hackers returned most of the stolen assets.
Reportedly, two major cryptocurrency hacks from different times and platforms seem to be linked by a common address. According to on-chain data examined by Look on Chain, a party that took advantage of Euler Finance’s protocol delivered 100 Ether worth more than $170,000 to a wallet linked to the Ronin network hack of Axie Infinity that was allegedly carried out by North Korean hackers known as Lazarus Group last year.
The vast majority of crypto lost in the first half of 2023 were coins and tokens minted on the Ethereum blockchain, at 75.6%. Meanwhile, the second largest stolen asset class, Binance Smart Chain tokens, came at just 2.6%. Additionally, as reported by Todayq News, in the first quarter of 2023, BNB Chain was the top target for crypto hackers and scammers, with over 73% of all rug pulls in the entire crypto ecosystem happening on the network.