Hacks Surge While Scams Decline

According to data reported by blockchain analysis firm Chainanalysis, losses arising from cryptocurrency hacks have surged 60% from January to July, while crypto scams witnessed a sharp 65% decline over the same period.

In a blog posted on Tuesday, Chainanalysis has found that losses arising from cryptocurrency hacks have gone up by 60% in the first seven months of the year to $1.9 billion, which has been propelled by a surge in funds stolen from decentralised finance (DeFi) projects. In the same period the previous year, funds collected from hacking stood at $1.2 billion.

The blog says that:

DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits and it’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices.

Most of the funds collected from hacking can be attributed to so-called “bad actors” affiliated with North Korea, in particular hacking units such as the Lazarus Group. According to estimates by the firm, North Korea-affiliated groups have stolen around $1 billion in cryptocurrencies from DeFi protocols this year.

While cryptocurrency hacks have surged significantly this year, over the same period, crypto scams have declined a massive 65%. Revenue collected from scams from January to July has declined from $4.46 billion last year, to $1.6 billion. The firm said that since January 2022, scam-related proceeds have fallen in line with the overall crypto market. Research also shows that not only did proceeds from scams fall, but the cumulative number of individuals transferred to scams in 2022 was the lowest it has been in the past four years. Chainanalysis says in the report:

Those numbers suggest that fewer people than ever are falling for cryptocurrency scams. One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.