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In a recent analysis by TRM Labs, a blockchain intelligence firm, it was found that hackers successfully siphoned around $400 million from multiple cryptocurrency initiatives during the first quarter of 2023, comprising a series of 40 targeted attacks.
Remarkably, this total represents a substantial 70% decrease compared to the corresponding period of the prior year.
TRM Labs Report Reveals Cryptocurrency Hacks Declined By 70% In Q1 2023
TRM Labs has also revealed in his latest report that the average size of these hacking incidents has decreased over time. In 2022, the average amount stolen during such attacks was $30 million, while in the corresponding period of 2023 it decreased to $10.5 million.
Interestingly, hackers have been increasingly paying back the money they stole, opting for a "white hat" bounty from the projects they targeted. TRM Labs estimates that hacking victims managed to recover almost half of the stolen funds in 2023.
Notable examples include an attacker who exploited the TenderFi protocol and returned half of the $1.6 million earned from the attack after receiving a $850,000 bounty from TenderFi.
Similarly, the person responsible for exploiting the Euler lending protocol also agreed to give up the entirety of the $200 million cryptocurrency sum that had been acquired. These events took place in the month of March. Later, in April, the perpetrator who exhausted the Safemoon protocol recovered $7.1 million of the stolen digital assets and chose to retain the remaining $9 million.
TRM Labs suggests that increasing attention from regulators regarding cryptocurrency hacks, along with a number of high-profile compliance cases, could explain this trend.
Cryptocurrency exchanges have been tightening their know-your-customer (KYC) and anti-money-laundering (AML) policies, making it more difficult for hackers to turn stolen coins into cash.
Additionally, the popular Ethereum mixing protocol Tornado Cash has been under US sanctions since August 2022, effectively blacklisting all Tornado-related funds on regulated exchanges. The protocol has been widely used as a tool for Ethereum laundering.
Furthermore, the arrest of Avraham Eisenberg, who became the first known person to be detained for a decentralized finance (DeFi) exploit, may serve as a warning. Eisenberg publicly admitted to exploiting the Mango Markets protocol, thus exposing his vulnerability. He was arrested in Puerto Rico in December.
Ari Redbord, TRM Labs' head of legal and government affairs, said the ability to track and trace stolen funds has improved significantly. Not only are researchers employing blockchain intelligence tools like TRM, but users of platforms like Twitter are also using open source tools, making hacked funds publicly traceable in real time.
Consequently, malicious hackers find it more difficult to download stolen funds, leading them to settle for bug bounties. Furthermore, the emergence of โwhite hatโ hackers, who actively contribute to strengthening cybersecurity measures, has become increasingly prevalent within the DeFi services ecosystem.
It is worth noting that the return of stolen funds is not a completely new phenomenon within the DeFi space. Past examples include the hackers behind Defrost Finance and Nomad Bridge in 2022, the Poly Network in 2021, and dForce in 2020.
In March, Crystal Blockchain estimated the total cost of hacks and scams to be around $119 million. DeFi protocols remain a prime target for attackers due to the intricate nature of smart contracts, which can be susceptible to manipulation. According to Chainalysis, DeFi exploits accounted for 82% of all stolen cryptocurrencies in 2022.
Despite a decline in crypto rates in the first quarter of 2023, the security of the crypto market is expected to remain uncertain, and the current decline is likely to be a temporary relief rather than a lasting trend.
Chainalysis estimates that approximately $3.8 billion was stolen in crypto hacks, primarily targeting decentralized finance (DeFi) protocols and attributed to North Korea-linked attackers. TRM Labs warns that this slowdown is likely to be temporary and expects hacking cases to increase in the future with some large-scale attacks.
Tornado Cash Hack: Attacker's Proposal Raises Doubts Amid Limited Options
A person who caused widespread alarm by hijacking the Tornado Cash government is now proposing to reverse his actions, though trust in the hacker remains questionable, leaving the community with limited options.
On May 21, a malicious proposal successfully gave the attacker full control over the Tornado Cash government. With this authority, the attacker had the potential to inflict significant losses by removing locked votes, draining government contract tokens, and disrupting the system.
In response, community member Tornadosaurus-Hex took proactive steps to mitigate the potential damage by submitting a proposal for members to remove their funds locked in governance. However, Hex expressed uncertainty about the effectiveness of this new proposal given control of the attacker.
Shortly after the attack began, the perpetrator contacted the Tornado Cash community and submitted a new proposal conveying their intention to relinquish governance control. Community member Hex released this update, highlighting the likelihood of the attacker going ahead with his plan and checking the validity of storage layouts.
While certain members of the community adopted a sense of optimism regarding the apparent change in attitude of the attacker, alternative theories emerged suggesting that this display could be a calculated maneuver to increase the value of the TORN token before executing a quick exit strategy. .
While the first quarter of 2023 has seen a significant decrease in crypto hacks in general, as shown in the chart provided by TRM Labs.
However, past experiences serve as a reminder that cryptocurrency users should not become complacent, as previous sluggish periods have been followed by a surge in attacks in 2022.
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