The cryptocurrency world has always been embroiled with news related to different crypto-related entities suffering hacks, exploits, or scams that result in losing millions.
Even though efforts are being made to ensure these platforms remain immune from such attacks and exploits, there is still too much work left to be done.
However, if you read the report by Blockchain security firm PeckShield, some hope has emerged recently. PeckSheild recently published a report summarizing cryptocurrency holders’ losses from hacks and attacks.
According to them, a whopping $2.61 billion was last in 2023 to these crimes, and they are not even including the multichain losses here.
However, the glimmer of hope we referred to earlier was that there is a 27.78% decrease in the amount stolen if you compare it to the statistics of 2022. In 2022, the crypto community witnessed losses of $3.6 billion due to cyber thefts.
Another positive note the security firm shared was that $674 million of stolen funds had been recovered from over 600 hacks on a large scale, i.e., 25% of the stolen cryptocurrency.
The security firm has credited more active negotiations with hackers and the increase in offering bounties for identifying bugs as the main factors that aided in recovering such large sums of stolen funds.
If you compare these figures to 2022, only $133 million in stolen funds were recovered, so vast strides have been made in a successful recovery approach.
In a statement given to the Cointelegraph website, PeckShield stated: “Engaging in active negotiations with hackers can lead to the return of stolen funds. Implementing bug bounty programs or on-chain sleuthing to identify hackers and vulnerabilities in the system can enhance security.”
PeckShield has also suggested that engaging with centralized exchanges, Tether, and law enforcement agencies to freeze detected funds can effectively recover stolen cryptocurrency.
PeckShield also reported a 25% decrease in laundered stolen funds in 2023 compared to the previous year. In 2022, there were $460 million in laundered funds, whereas 2023 saw a reduced amount of $342 million.
In addition to the recovered amounts from security breaches, PeckShield emphasized diverse data points, such as flash loans, decentralized finance (DeFi), and the volume distinction between hacks and scams, which indicates that PeckShield is drawing attention to a broader set of metrics and indicators in the cryptocurrency space.
According to the data, 40% of the hacks occurring in 2023 were attributed to flash loan attacks.
There has been an ongoing assessment regarding whether improvements in DeFi security have led to a reduction in the amount of hacking victories and less crypto being stolen in 2023. While this may be the case from the outset, PeckShield has highlighted that DeFi remains the prime target for hacks and scams.
Hackers often target Decentralized Finance (DeFi) due to characteristics like smart contract vulnerabilities, complexity in protocol design, governance issues, flash loan exploits, and reliance on external data sources (oracles), which can be manipulated for financial gains. These factors create potential points of weakness that malicious actors may exploit to compromise the security of DeFi platforms.
The positive development regarding witnessing a reduction in successful hacking attempts due to improved blockchain security was shared previously by blockchain security company CertiK’s co-founder Ronghui Gu.
He highlighted that expanding bounty platforms and introducing security measures designed to nullify these hacks in the early stages is a good sign for upcoming years.
However, there is still much room left for improvement, as PeckShield’s report highlighted that 67% of losses suffered in the crypto hack in 2023 took place in DeFi, while 33% suffered in centralized finance.
The security firm also highlighted that 58% of the losses resulted from hacks, while 42% were attributed to scams.
There’s been a shift in the targeted cryptocurrencies by malicious actors. While Bitcoin dominated illicit transaction volume from 2018 to 2021, stablecoins became more substantial in 2022 and 2023.
