Chainalysis Forecasts Record Year for Crypto Hacks
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Amid the market downturn, hacks and thefts have once again found prominence in the industry. According to a report, $3 billion has been stolen in the crypto space this year.
Chainalysis Astounding Figures for October
In a Twitter thread, Chainalysis, the market’s leading data and analysis tracking platform, disclosed that $3 billion in crypto had been stolen this year. The thread highlighted several of the biggest hacks in the market that have taken place this year.
1/ After four hacks yesterday, October is now the biggest month in the biggest year ever for hacking activity, with more than half the month still to go. So far this month, $718 million has been stolen from #DeFi protocols across 11 different hacks. pic.twitter.com/emz36f6gpK
— Chainalysis (@chainalysis) October 12, 2022
Chainalysis also revealed that October has so far been the worst month of the year for crypto thefts. According to the tracking platform, the decentralized finance (DeFi) sector has been the biggest victim of hacks, with 11 incidents this month and hundreds of millions in user funds stolen.
On October 11, four exploits were recorded, with about $122 million in funds stolen. Hackers stole $1.98 million from the Ethereum bridge belonging to blockchain-based coding service QANplatform and $200,000 from crypto wallet service Rabby Wallet after a smart contract vulnerability was discovered.
Rabby Swap @Rabby_io suffered an exploit with a loss of ~$200,000. There is an external call to RabbyRouter's _swap function, resulting anyone can call this function and transfer out users’ funds who have approved this contract.
Pls revoke approval for the following contracts:
— Beosin Alert (@BeosinAlert) October 11, 2022
TempleDAO, a yield farming Defi protocol, was also exploited to the tune of $2 million, while Mango Markets, a decentralized yield farming crypto platform built on the Solana blockchain, lost $118 million after a hack.
.@templedao exploited for $2m it seems pic.twitter.com/k0nBLSoxnx
— Spreek (@spreekaway) October 11, 2022
It appears the attacker was able to manipulate their Mango collateral. They temporarily spiked up their collateral value, and then took out massive loans from the Mango treasury. pic.twitter.com/2IJrB9RcEJ
— OtterSec (@osec_io) October 11, 2022
Approximately 125 hacks have been reported in the market this year, showing a high probability that 2022’s hacks will surpass 2021’s figures.
Much Work for DeFi to Do
Chainalysis also pointed out that hackers appear to have shifted their focus over the past year. Initially, centralized exchanges, wallets, and training platforms were the primary targets for hackers. However, as the companies running these platforms have beefed up their security protocols, hackers have had to get more inventive.
Unfortunately, DeFi protocols appear to be the perfect victims. Chainalysis estimates that about 90% of all hacks this year have taken place on DeFi protocols, with hackers capitalizing on these platforms’ comparatively inferior security infrastructures.
Hackers have also turned their attention to cross-chain bridges, which enable the transfer of assets and data between two blockchain ecosystems. Three bridges have been hacked this month, accounting for 82% of the month’s hacks. The biggest of these hacks was the exploit on Binance’s BNB Smart Chain bridge, which connects the chain to its Beacon Chain. An exploit on the bridge led to its pause on October 6, with hackers making off with about $100 million.
To confirm, we have suspended BSC after having determined a potential exploit.
All systems are now contained, and we are immediately investigating the potential vulnerability. We know the Community will assist and help freeze any transfers.
All funds are safe.
— BNB Chain (@BNBCHAIN) October 6, 2022
Recall that the biggest hack in history also happened earlier this year after hackers broke into Axie Infinity’s Ronin bridge, which enables asset transfers between the blockchain and Ethereum. The exploit caused Axie to lose about $625 million, leading to a lengthy downtime from which the once prominent gaming platform has not totally recovered.
The increased security breaches and hacks will only erode faith in the crypto industry that has been built for years. These shortfalls and the market downturn that has seen the entire industry lose over 50% of its market cap and value have dragged the market back significantly. However, history has shown that crypto continues to bounce back from one setback after another.
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