Sophisticated Attacks on the Rise: Cryptocurrency Market Faces $1.9 Billion Loss in 2023

Sophisticated Attacks on the Rise: Cryptocurrency Market Faces $1.9 Billion Loss in 2023

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The cryptocurrency market experienced losses of $1.9 billion in 2023 due to hacks, a substantial decline of 93.6% from the previous year.

While this appears to be a positive trend, closer examination reveals a bleaker picture, with the frequency and sophistication of attacks increasing, according to blockchain security auditor Hacken.

2023 sees avalanche of ‘sophisticated attacks’

2023 Hacken Security Report shared with CryptoPotato revealed that the total amount lost due to attacks and scams decreased to $1.9 billion. The biggest theft of the year involved Multichain, which saw $231 million drained from its bridge.

This is significantly smaller than the Terra Luna incident of 2022, which wiped out more than $40 billion in value, causing widespread industry collapses. Hacken described 2023 as a period of increased security and better protection practices.

However, the auditor recorded a 14% increase in the number of attacks compared to the previous year, with a notable increase in various types of hacks.

By far the most damaging type of vulnerability this year was access control, where unauthorized access to hot wallets by hackers or insiders resulted in half of all stolen funds, averaging 31 million. dollars per incident. This includes violations such as multichain and Atomic wallet.

Flash Loan attacks followed, with a total amount stolen of just over $275 million, despite a higher number of incidents than Access Control. Meanwhile, Rug Pulls averaged $566,000 per incident, making them the second least damaging attack type after the closely related Honeypot scams.

Impact of decoding

In 2023, there was a change from the previous trend, in which centralized companies successively collapsed due to increasing bad debt. Hacken’s findings reveal that the most affected sector was lending and borrowing, particularly smart contract-based money markets.

These platforms add significant liquidity pools and provide loans to users against collateral. However, they became prime targets for hackers exploiting flash loans.

Closely behind in terms of stolen value were bridges and centralized exchanges (CEX). Due to their significant liquidity pools, these projects often attract hackers and insider threats.

An analysis of the blockchain networks most affected by exploits indicates that BNB Smart Chain (BSC) and Ethereum are the main targets, each for different reasons. BNB Chain reported 214 incidents, mainly rug pulling, due to its large user base, low fees, and ease of capital movement, making it an attractive target for large-scale and profitable malicious activities.

Ethereum found 176 incidents, from classic carpet attacks to sophisticated flash lending attacks. Even smaller platforms experienced their fair share of incidents. For example, Arbitrum found 30 incidents, often linked to access control issues, highlighting vulnerabilities in emerging networks.

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