Temporary Relief or Calm before Storm
Despite a decline in crypto hacks in Q1 2023, the article warns that it is likely a temporary break before a potential surge in attacks.
Crypto hacks significantly decreased during Q1 2023 compared to 2022, according to a report by blockchain intelligence company TRM Labs.
According to the TRM Labs study reported by Cointelegraph, the amount stolen in cryptocurrencies dropped dramatically from nearly $30 million to less than $11 million compared to the quarters of 2022.
“The average hack size also took a hit in Q1 2023 – down to $10.5 million from nearly $30 million in the same quarter of 2022, even though the number of incidents was similar (around 40).”
However, the company warned that the decrease is likely only a temporary relief rather than a long-term trend, as in the past, declines of this kind were followed by a record increase in attacks.
Record-Breaking Year: Cryptocurrency Hacks Soared in 2022
According to a report by Chainalysis, 2022 witnessed the highest number of cryptocurrency thefts in history, reaching record-breaking figures of approximately $3.8 billion. The majority of these thefts were primarily targeted at decentralized finance protocols, with a significant connection to hackers affiliated with North Korea.
Decentralized Finance (DeFi) protocols were the main targets for hackers, accounting for 82.1% of the stolen funds. The most affected were cross-chain bridges due to their role as centralized repositories of funds.
The report also emphasized the need to improve security in DeFi protocols by conducting code audits by third parties and adopting new security measures such as simulated attack tests, close monitoring of suspicious activity, and the implementation of automatic switches to halt transactions if suspicious activity is detected.
Additionally, the report highlights the significant involvement of hackers associated with North Korea, who were responsible for stealing over $1.7 billion in cryptocurrencies. Consequently, Chainalysis emphasized the critical importance of blockchain transparency in combating cybercrime.
Cryptocurrency hacks appear to have cooled down following the sanctions on Tornado Cash.
TRM Labs stated that the sanction on Tornado Cash and the arrest of the operator of Mango Markets may have been the causes that curbed cryptocurrency hacks this year. After the sanctions on the decentralized cryptocurrency mixer, the total cash flow entering the platform dropped by 68%.
However, as it was reported by Coinspeaker, despite regulatory actions, Tornado Cash continues to operate, highlighting the challenges of regulating decentralized services. As a platform based on smart contracts, it cannot be forced to shut down by any individual or institution. According to Chainalysis, approximately 34% of all transactions made on Tornado Cash were associated with illegal activities such as cryptocurrency hacks and scams.
Similarly, the arrest of the alleged Mango Markets hacker, Avraham Eisenberg, may have acted as a deterrent against the criminal activities of hackers. This is because Eisenberg could potentially face several years of imprisonment for his involvement in fraudulent practices and market manipulation, despite the regulatory ambiguity in the cryptocurrency sphere.
Therefore, although there is a decrease in hacks during Q1, history has shown that cryptocurrency users should not become complacent, as hackers may be lurking, waiting for an opportunity to strike again.
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