Cryptocurrency Market’s $1.9 Billion Loss in 2023 Due to Sophisticated Attacks

The cryptocurrency market, though witnessing a substantial decrease in losses to $1.9 billion in 2023, is grappling with a surge in both the frequency and sophistication of attacks, according to a comprehensive security report by blockchain auditor Hacken.

Onslaught of ‘Sophisticated Attacks’

Hacken’s report highlights a contrasting landscape in 2023, with the total amount lost due to hacks and scams shrinking to $1.9 billion. While a positive trend at first glance, it unveils a more concerning reality as the number and complexity of attacks have seen a notable uptick.

The year saw a 14% increase in the number of attacks compared to the previous year, indicating a concerning surge in various types of hacks. The largest incident involved Multichain, where $231 million was siphoned from its bridge.

Access Control Dominates Vulnerabilities

Access Control emerged as the most damaging vulnerability, accounting for half of all stolen funds and averaging $31 million per incident. This breach involves unauthorized access to hot wallets by hackers or insiders, with notable breaches in Multichain and Atomic Wallet.

Flash Loan attacks followed closely, totalling just over $275 million in stolen funds, showcasing a higher number of incidents compared to Access Control. Rug Pulls, averaging $566,000 per incident, were the second least damaging attack type after closely related Honeypot scams.

Also Read: 5 Major DeFi Hacks That Shook 2023

Impact on Specific Sectors

The departure from the previous trend, where centralized companies collapsed due to mounting bad debt, was evident in 2023. The Lending and Borrowing sector, particularly smart contract-based money markets, bore the brunt of the attacks. These platforms, aggregating significant liquidity pools and providing loans against collateral, became prime targets for hackers exploiting flash loans.

Bridges and Centralized Exchanges (CEXs) also faced significant impact due to their substantial liquidity pools, drawing attention from hackers and insider threats.

Blockchain Networks Under Attack

BNB Smart Chain (BSC) and Ethereum emerged as primary targets, each facing distinct challenges. BNB Chain reported 214 incidents, primarily rug pulls, owing to its large user base, low fees, and ease of capital movement. Ethereum, with 176 incidents, faced a spectrum of attacks from classic rug pulls to sophisticated flash loan exploits. Smaller platforms like Arbitrum also experienced vulnerabilities, with 30 incidents linked to access control issues.

As the cryptocurrency market grapples with evolving threats, security measures and vigilance become paramount to safeguarding digital assets and maintaining investor confidence. The dynamics of these attacks indicate a pressing need for continuous innovation in blockchain security protocols.

Key Takeaways:

• The cryptocurrency market experienced a 93.6% decrease in losses to $1.9 billion in 2023.
• Access Control vulnerabilities dominated, resulting in half of all stolen funds, with an average of $31 million per incident.
• Flash Loan attacks followed closely, totalling just over $275 million, despite a higher number of incidents than Access Control.

Also Read: OKX DEX Hack: Analysis of the $430k Cryptocurrency Exploit