The cryptocurrency space faced a turbulent second quarter, with approximately $572.68 million lost due to hacking and scams, marking a significant increase from previous times.
This increase in losses represents a 70.3% increase from the first quarter and a staggering 112% year-over-year increase, reflecting the growing trend of digital asset vulnerability.
Analyzing Major Incidents and Security Failures
Data from web3 bug bounty and security services platform Immunefi paints a grim picture of the current state of crypto security, underscoring the urgent need for improved security measures across the industry.
Notably, the central financial platforms (CeFi) bore the brunt of this attack, accounting for 70% of the total losses. This change reflects a worrying trend as attackers are increasingly targeting these institutions in addition to financial (DeFi) networks, which have been heavily affected in the past.
The biggest incidents include the $305 million embezzlement of Japanese cryptocurrency trading platform DMM Bitcoin and the theft of $55 million from Turkish crypto exchange BtcTurk.
In addition, May emerged as the most challenging month of the quarter, posting the highest loss at $358.5 million. Despite this massive financial damage, there were some small victories, such as the recovery of $28.7 million, which accounted for only 5% of the total amount stolen in Q2.
These acquisitions took place in four key entities: 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 can lead to significant financial losses, especially when CeFi infrastructure is involved.
The dominant loss mode was hacking, which represented 98.5% of all financial losses in 53 cases. In contrast, fraud, scams, and racketeering accounted for just 1.5% of losses but occurred in 19 cases.
This difference points to the technical sophistication and scale of the hacks compared to traditional fraud practices within the crypto sector.
Targeted Networks and Emerging Threats
Ethereum and BNB Chain were the most targeted networks during the quarter, continuing the trend from Q1. Ethereum experienced the highest number of individual attacks, with 34 incidents accounting for 46.6% of the total chain losses, followed by the BNB Chain with 18 incidents.
These targeted attacks against prominent networks highlight the need for continuous monitoring and improved security protocols within these ecosystems.
In addition to these direct financial threats, the rise of advanced counterfeiting technology presents a new frontier in crypto-related scams. Bitget Research recently revealed that losses caused by deep-pocketed scams could rise to more than $25 billion by 2024.
Have you ever been caught in a deepfake crypto scam?
Bitget Research recently released a report highlighting that Deepfakes may account for 70% of crypto crimes in two years and the annual loss caused by crypto deepfakes may reach $25.13 billion by the end of 2024. pic.twitter.com/xnwj7xFLOy
– Bitget (@bitgetglobal) June 27, 2024
These sophisticated schemes often use fake projects, phishing attacks, and Ponzi schemes, using deep-fake technology to create an illusion of credibility and mislead investors.
The featured image was created with DALL-E, a Chart from TradingView
