The crypto industry has witnessed a significant decrease in monetary losses caused by hacks, scams, and rug pulls during the first half of 2023, according to a new report by Beosin, a Web3 security firm.
According to the report, Scams, hacks, and rug pulls stole $656 million of cryptocurrencies during the first half of 2023. A big drop of 69% occurred in the second half of 2022 after these incidents actively took $2.1 billion in crypto.
H1 2023 Web3 Security Statistics
🚨Total losses from hacks, phishing scams, and rug pulls in Web3 reached $655.61 million in the first half of 2023.
108 attacks -> $471.43M
Phishing scams -> $108M
110 rug pulls -> $75.87M pic.twitter.com/8Q9kmDETfQ
— Beosin Alert (@BeosinAlert) June 30, 2023
Several factors actively contributed to the drop in crypto scams, including enhanced security measures implemented by crypto projects, increased user awareness and education, and more active efforts from law enforcement and regulatory bodies.
Among the three categories of crypto losses, hacks accounted for the largest share, with $471.43 million lost in 108 protocol attacks. This was followed by phishing scams, which resulted in $108 million of losses, and rug pulls, which caused $75.87 million of damage.
However, the report also noted that hackers recovered or returned some of the stolen assets. Beosin analysts added:
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.
Ethereum Remains The Most Targeted Blockchain
The report unveiled a striking finding of H1 2023 – the majority of lost crypto, accounting for 75.6%, comprised coins, and tokens minted on the Ethereum blockchain. In contrast, Binance Smart Chain tokens constituted only a minor portion, representing merely 2.6% of the stolen assets.
Ethereum remains the prevailing and alluring platform for legitimate and illegitimate crypto activities. According to the report, its dominance can be attributed to various factors, including high liquidity, a substantial user base, and a diverse ecosystem of decentralized applications (DApps).
In addition, most of the stolen cryptocurrency was lost due to vulnerabilities within smart contracts, accounting for 56% of the total losses. Another notable portion (21.4%) suffered losses without any clear and identifiable reasons. The report further stated that certain instances of loss could be attributed to either human errors or insider collusion.
One Hack Exceeded $100 Million
The report also highlighted several significant incidents that occurred in the first half of 2023. One notable event was the Euler Finance flash loan hack on March 13, resulting in a staggering $195 million loss. It stands out as the sole breach surpassing the $100 million mark in value.
Euler Finance functions as a decentralized lending platform, enabling users to borrow and lend crypto assets at favorable interest rates. Unfortunately, hackers took advantage of a flaw in the platform’s smart contract, allowing them to borrow beyond their means of repayment.
However, after Euler Finance offered the hackers a bug bounty reward and threatened legal action, most of the stolen funds were eventually returned. Following this resolution, on April 12th, the platform proceeded to enable redemptions for its users.
Crypto Security Remains A Challenge
The report highlighted a decrease in crypto losses but emphasized that the challenge of ensuring crypto security persists for both users and developers. It urged caution and vigilance when engaging with unfamiliar or suspicious projects or platforms.
The advisory also urged developers to audit and test their smart contracts and protocols regularly and to embrace best practices and standards for Web3 security.
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The report concluded by stating that Beosin would persistently monitor and analyze the crypto security landscape. Its primary objective is to deliver prompt alerts and valuable insights to its clients and partners.