Over the past few years, the use of cryptocurrencies has increased significantly. The rise in usage has brought an equal rise in crypto scams and hacking attempts. As the world continues to embrace cryptocurrencies, people still remain skeptical and seek answers on whether they can trust the system. To address this concern, researchers have conducted a study on crypto hacks and the overall trend to return stolen money. The following is an overview of their findings.
The report on crypto hacks
According to a recent report published by blockchain analytics firm CipherTrace, the loss of cryptocurrencies due to hacks and frauds has significantly declined in 2020. The report contains the latest data on crypto fraud, scams, and hacks and how they are affecting the industry. The research shows that overall, the total losses due to cryptocurrency attacks dropped by 57% in 2020 compared to the previous year.
The report further indicates that the total amount of money stolen from crypto exchanges in 2020 was $1.8 billion, a significant decline from 2019, where the total amount stolen was $4.5 billion. This year’s numbers are even lower compared to the peak in 2018, when hackers stole $6.7 billion from cryptocurrency exchanges.
The report also highlights that the strict regulatory measures imposed by various governments are playing a crucial role in reducing the number of cybercriminal activities within the cryptocurrency industry. CipherTrace CEO Dave Jevans stated that the industry is maturing and cleaning up. The decline in theft and fraud rates are signals that the cryptocurrency industry is beginning to mature, and the industry’s infrastructure is becoming more secure.
Crypto hackers tend to return stolen money
One interesting finding from the CipherTrace report is that hackers, after stealing cryptocurrency from victims or exchanges, tend to return the stolen money. The report found that hacker’s behavior has been changing over the years. As more people enter the crypto industry, many people are still inexperienced, making them an easy target for cybercriminals. However, hackers are now considering whether to return the stolen funds, as they are aware of the potential consequences.
The report indicates that since the beginning of 2020, a total of $0.98 billion in stolen cryptocurrency has been returned to the targets. The data shows a significant increase in the number of refund transactions compared to the previous year. In 2019, the total refund amounted to $1.28 billion, which is lower than the 2020 payment.
However, the report noted that hackers are not entirely repentant, and they still aim to take advantage of the crypto ecosystem’s vulnerabilities. Therefore, they use a different approach that doesn’t involve stealing funds directly from the victims, such as phishing scams or decentralized finance (DeFi) attacks.
Conclusion
In conclusion, the report by CipherTrace indicates that crypto hacks are declining, and crypto exchanges are becoming more secure. Governments and regulatory bodies worldwide have implemented strict measures to minimize fraud and prevent illegal activities in the cryptocurrency industry. The study indicates a sign of the industry’s maturity, which tends to be more secure and trustable.
Another highlight of the report is the trend within the hackers’ community to return stolen funds. As more people enter the crypto industry, many remain vulnerable. Therefore, hackers’ ethical consideration is a positive development. However, it is essential to note that hackers are still finding other ways to infiltrate the crypto ecosystem. Therefore, all stakeholders need to remain vigilant, and users must take adequate measures to secure their accounts and assets.
Blockchain intel firm TRM Labs recently released a report on cyberattacks on crypto projects, stating that hackers stole approximately $400 million from these projects during 40 attacks in the first three months of 2023. While this is a large sum of money, it marks a 70 percent decline from the Q1 of 2022. Furthermore, the average size of cryptocurrency hacks has dropped from $30 million in 2022 to $10.5 million for the same period in 2023.
According to TRM Labs, the increase in white hat bounties and the amount of returned funds suggest that hackers are finding it increasingly difficult to cash out stolen crypto, making them more likely to settle for bug bounties. Hack victims even received almost half of the stolen funds back in 2023, as per TRM Labs’ estimates.
The report highlights several examples, including the hackers targeting two crypto protocols – TenderFi and Euler – who returned some or all of the stolen funds. The TenderFi protocol hacker returned half of the $1.6 million stolen to the protocol after being paid an $850,000 bounty. Similarly, the Euler lending protocol hacker agreed to return all of the $200 million worth of cryptocurrency stolen. Meanwhile, the hacker who drained the Safemoon protocol returned $7.1 million of the crypto he stole, keeping the remaining $1.9 million.
One possible reason for the decrease in crypto hacks could be the increasing regulatory focus on the space. Crypto exchanges are ramping up their know-your-customer (KYC) and anti-money laundering (AML) policies, making it harder to cash out stolen coins. Additionally, the U.S. treasury has blacklisted all Tornado-related funds, making it difficult for regulated exchanges to handle them. Finally, the arrest of Avraham Eisenberg served as a warning to potential attackers. He became the first person known to be arrested for a DeFi exploit after exploiting the Mango Markets protocol and publicly admitting it.
TRM Labs’ head of legal and government affairs, Ari Redbord, said that the inability of malicious hackers to off-ramp funds has made it increasingly challenging for them to operate in the space. He also believes that white hat hackers are becoming increasingly a part of the ecosystem and could help DeFi services to harden their cybersecurity controls.
While DeFi protocols are still a popular target for hackers, the decrease in the size of crypto hacks represents progress in the fight against cyberattacks on the crypto industry. As the space continues to mature and regulators step up their monitoring activities, it is likely we will see this trend continue. In the meantime, crypto firms must remain vigilant and ensure they have robust cybersecurity measures in place to prevent attacks.
