DeFi
Hacks and scams cost crypto over $573 million in Q2
In the second quarter of this year, the cryptocurrency industry faced significant security challenges, with losses from hacks and scams amounting to $572.7 million across 72 incidents, according to a recent report from Immunefi, a Web3 security services and bug bounty platform.
Impact on decentralized finance (DeFi) platforms
This represents a substantial increase of 70.3% over the $336.3 million in losses recorded in the first quarter and more than double the $265.5 million stolen in the same quarter last year.
Year-to-date losses for the year have increased 24% to more than $900 million compared to the same period last year.
Decentralized finance (DeFi) platforms, which collectively hold nearly $100 billion in value according to DeFiLlama data, have been heavily targeted by cybercriminals.
Crypto losses in Q2 2024. Source: Immunefi
While DeFi accounted for all of the exploits tracked by Immunefi in Q1, the focus shifted in Q2, with centralized finance (CeFi) platforms suffering the majority of financial damage.
Of the total losses in the second quarter, CeFi accounted for $401.4 million, or 70%, with the remaining 30%, or $171.3 million, attributed to DeFi.
Two major incidents made headlines this quarter, together accounting for $360 million, or 62.8% of total losses.
The greatest of them was a $305 million breach of Japanese cryptocurrency trading platform DMM Bitcoin, followed by a $55 million theft from Turkish crypto exchange BtcTurk on June 23.
May was the month with the highest monthly losses, with a total of $358.5 million. Despite these high losses, only $28.7 million, or 5% of the total funds stolen during the quarter, was recovered from four separate exploits involving companies including Bloom, ALEX Lab, Gala Games, and YOLO Games.
Expert insights and infrastructure compromises
Mitchell Amador, Founder and CEO of Immunefi, highlighted the devastating impact of infrastructure compromises, noting that the shift to targeting CeFi infrastructure has led to a significant increase in losses.
He stressed the importance of robust security measures across the entire ecosystem to avoid financial damage on such a large scale.
He said the second quarter highlighted how a single compromise on infrastructure can result in millions in losses, making protecting the entire ecosystem crucial.
The vast majority of this quarter’s financial losses were due to hackswhich accounted for 98.5% or $564.2 million of the total, occurring across 53 incidents. In contrast, fraud, scams and carpet thefts accounted for only 1.5% or $8.5 million, spread across 19 incidents.
The most targeted blockchain networks were Ethereum and BNB Chain. Ethereum was the most affected with 34 incidents, accounting for 46.6% of the total losses on these networks, while BNB Chain followed with 18 incidents accounting for 24.7% of the losses.
Other networks like Arbitrum, Blast, Optimism, Solana, Polygon, Fantom, Linea, Mantle and TON also experienced incidents but to a lesser extent.
Immunefi’s Role in Cryptocurrency Security
Immunefi’s role in cryptocurrency security has become increasingly crucial. Earlier this month, the platform passed the milestone of $100 million in payments to ethical hackers and researchers over the past three years, stemming from more than 3,000 bug bounty reports.
This achievement highlights the critical role of the ethical hacking community in safeguarding the blockchain ecosystem.
Immunefi claims to operate the largest blockchain security community with over 45,000 researchers and credits these efforts with saving over $25 billion in user funds across various protocols such as Polygon, Optimism, Chainlink, The Graph, Synthetix and MakerDAO against potential thefts.
The high-profile payments facilitated by Immunefi demonstrate the value of vigilance in the crypto space. The highest bounty offered by the platform was a $10 million reward for identifying a vulnerability in the Wormhole cross-chain protocol.
This substantial payment underscores the importance of ongoing monitoring and the crucial role ethical hackers play in identify and mitigate potential threats before they can be exploited by malicious actors.
The second quarter of this year highlighted the ongoing vulnerabilities in the cryptocurrency industry, particularly within centralized financial platforms. The significant increase in losses due to hacks and scams reflects the persistence and evolution of the threat landscape.