A lot of money was lost in the second quarter of 2023 because of crypto, or similar, hacks.
According to the quarterly report by CertiK, a blockchain security company, more than $300 million worth of digital assets were lost due to crypto hacks and exploits in the second quarter of 2023. The report compiled on – chain data and revealed a total of 212 security incidents during this period. Comparing these figures to the second quarter of 2022, when hacks and exploits resulted in losses of $745 million, the report highlighted a 58% decrease in the amount lost year – to – year.
Common types of online scam
- EXIT SCAM: “An exit scam is a confidence trick where an established business stops shipping orders while receiving payment for new orders. If the entity had a good reputation, it could take some time before it is widely recognized that orders are not shipping, and the entity can then make off with the money paid for unshipped orders. Customers that trusted the business do not realize that orders are not being fulfilled until the business has already disappeared” (Source: wikipedia).
- FLASH LOANS: A flash loan is a type of loan where a user borrows assets (usually some amount of cryptocurrency) with no upfront collateral and returns the borrowed assets within the same blockchain transaction. This “permissionless”, decentralized type of loan can only exist if the borrower pays it back within the same transaction. As a result, defaulting on a flash loan is theoretically not possible, since the entire transaction would simply revert. (Source: chain.link).
- ORACLE MANIPULATION ATTACK: “Bad actors typically carry out oracle manipulation attacks by using large amounts of cryptocurrency to quickly increase the trading volume of low-liquidity tokens on the targeted DeFi protocol, which can lead to fast, significant price increases not reflective of the wider market. Those initial funds are often sourced through a flash loan if the attacker doesn’t have the funds on hand. Once an asset’s price has been driven up, the attacker can then exchange their artificially inflated holdings for other tokens with greater liquidity and a more consistent value, or use them as (worthless) collateral to borrow assets, never to be repaid.” (Source: https://blog.chainalysis.com/ )
While the total amount lost was lower compared to the previous year, the second quarter of 2023 witnessed an increase in losses due to exit scams, reaching approximately $70 million. This amount nearly doubled the losses from similar scams in the first quarter, which amounted to around $31 million. On the other hand, losses from flash loans and oracle manipulation exploits significantly declined in the second quarter compared to the first quarter of 2023. The first quarter saw 52 oracle manipulation attacks leading to losses of approximately $222 million, with the Euler Finance hack accounting for 85% of the losses.
Additionally, CertiK highlighted that out of all the blockchains analyzed, BNB Chain experienced the highest number of incidents, with 119 in total, resulting in losses of $70,711,385. Ethereum ranked second, with 55 incidents leading to hackers obtaining $65,999,953. This is natural, given the volume of their respective transactions.
Even in 2023, the old rule of thumb still applies: if it’s too good to be true, stay away!
