Cryptocurrency market could lose $1.9 billion by 2023 due to sophisticated attacks
The cryptocurrency market is suffering from a surge in the frequency and sophistication of attacks, although losses are expected to decline significantly to $1.9 billion in 2023, according to a comprehensive security report from blockchain audit firm Hacken.
Onslaught of ‘sophisticated attacks’
Hacken’s report highlights the contrasting situation in 2023, when total losses due to hacking and fraud will fall to $1.9 billion. Although this is a positive trend at first glance, a significant increase in the number and complexity of attacks has revealed a more concerning reality.
This year, the number of attacks increased by 14% compared to the previous year, showing a sharp increase in various types of hacking. The biggest incident involved Multichain, where $231 million was withdrawn from the bridge.
Domination of vulnerabilities due to access control
Access control was the most costly vulnerability, accounting for half of all stolen funds, averaging $31 million per incident. These breaches involve unauthorized access to hot wallets by hackers or insiders, with notable breaches occurring in Multichain and Atomic Wallet.
Flash loan attacks followed, with a total of over $275 million in stolen funds, showing a higher number of incidents compared to Access Control. At an average of $566,000 per incident, Rug Pulls were the second least costly attack type after the closely related honeypot scams.
Also Read: 5 Major DeFi Hacks That Rocked 2023
Impact on specific sectors
A departure from previous trends, where centralized corporations collapsed due to rising bad debt, became apparent in 2023. The lending and borrowing sector, especially smart contract-based money markets, has been the hardest hit by the attacks. These platforms, which aggregate significant liquidity pools and offer lending against collateral, have become prime targets for hackers exploiting flash loans.
Bridges and centralized exchanges (CEXs) have also been significantly impacted due to their significant liquidity pools and have attracted the attention of hackers and insider threats.
Blockchain networks under attack
BNB Smart Chain (BSC) and Ethereum have emerged as major targets, each facing distinct challenges. The BNB chain has reported 214 incidents, mainly rug pulls, due to its large user base, low fees, and ease of capital movement. With 176 incidents, Ethereum has faced a variety of attacks, from classic lug pulls to sophisticated flash loan exploits. Smaller platforms like Arbitrum also experienced vulnerabilities and had 30 incidents related to access control issues.
As the cryptocurrency market battles evolving threats, security measures and vigilance have become paramount to protecting digital assets and maintaining investor trust. The dynamics of these attacks indicate a critical need for continued innovation in blockchain security protocols.
Key Takeaways:
- The cryptocurrency market saw losses decline 93.6% to $1.9 billion in 2023.
- Access control vulnerabilities dominated, accounting for half of all stolen funds, averaging $31 million per incident.
- Flash Loan attacks followed with a total of just over $275 million, despite having more incidents than Access Control.