Crypto Security On The Rise: 27.78% Year-On-Year Decline In Hacks, Scams

The nascent cryptocurrency industry has demonstrated enhanced vigilance and security measures as it witnessed a significant drop in crypto-related scams and hacks last year, recording a 27.87% plummet year-on-year.

Blockchain security firm Peckshield reported on Monday that the cryptocurrency industry saw more than 600 major hacking incidents last year, logging a loss of approximately $2.61 billion.

Out of this amount, $1.51 billion was lost due to hacking incidents, while the remaining $1.1 billion was lost due to scams.

The firm also highlighted the efforts made to recover a substantial amount of stolen funds in the crypto space, which amounted to $674.9 million.

PeckShield's report emphasized that cybercriminals continued to focus their efforts on decentralized finance (DeFi) protocols, representing a staggering 67% of the total stolen value within the crypto space last year.

PeckShield's report aligns with the findings of Web3 smart contract auditor Certik. In its recent report, Certik highlighted a significant decline in cryptocurrency security incidents over the past year.

The total losses attributed to these incidents went down to $1.84 billion across 751 events, representing a remarkable 51% decrease compared to 2022.

Notably, each of these security incidents averaged approximately $2.45 million in losses, with the top 10 incidents accounting for a substantial portion of $1.11 billion.

Interestingly, the blockchain security firm also discovered that the median loss per incident was notably lower, standing at a mere $101,132.

November stood out as the month with the highest reported losses, totaling $363,367,327 from 45 incidents.

Furthermore, the third quarter of the year dominated the landscape with losses amounting to $686,558,472 across 183 incidents, encompassing a variety of hacks, scams and exploits.

The most recent crypto crime trend report unveiled by blockchain data platform Chainalysis earlier this month revealed a substantial decrease in illicit transaction volume involving digital currencies throughout 2023, which aligns with other reports.

Notably, the report highlights a remarkable decline in revenues generated through crypto scams, which fell by 29.2%, and hacking incidents, which plummeted by 54.3%.

The observed decrease in stolen funds resulting from hacking incidents is believed to be primarily influenced by a significant reduction in DeFi hacking.

This decline in DeFi-related hacking incidents may parallel a decrease in the total value locked within the DeFi ecosystem, and it could also indicate a positive trend wherein DeFi protocols are enhancing their security measures and practices.

"Historically, for example, we have seen scammers do their best when markets are up — which tends to bring new entrants into the market at a rapid pace," Eric Jardine, Chainalysis' cybercrimes research lead said.

"While Bitcoin did have a remarkably good year in terms of price appreciation in 2023, we have also observed a longer-term trend where scammers are increasingly relying on stablecoins, thus potentially muting the effects of recent bullish price action," Jardine added.