Recent research conducted by TRM Labs has revealed that the cryptocurrency industry experienced a notable downturn in hack volumes in 2023. Compared to the previous year, there was a significant decrease of more than 50%. Although the number of attacks remained consistent at approximately 160, the total value stolen plummeted to $1.7 billion, a stark contrast to the nearly $4 billion lost in 2022.
Since the inception of cryptocurrency in 2009, hackers have consistently managed to pilfer billions of dollars in digital assets on an annual basis. In 2020, approximately $1.9 billion was stolen, and the following year saw a staggering increase to $14 billion, marking a record-breaking year for cyber attacks. However, in 2022, cryptocurrency hacks resulted in a slightly lower figure of $3.8 billion being stolen from industry businesses, according to a Chainalysis report.
Infrastructure Attacks Dominate
TRM Labs’ research also revealed that the majority of the hacking incidents, accounting for around 60%, were classified as infrastructure attacks. These types of attacks involve the theft of private keys or the compromise of seed phrases, allowing criminals to infiltrate the foundational structure of a cryptocurrency system, including its servers, networks, or software. The motives behind these attacks vary, but they often involve either stealing assets or manipulating trades. On average, each incident of infrastructure attacks amounted to approximately $30 million, which is considerably higher than protocol assaults and code exploit attacks, which together only constituted a fifth of the total hack volumes.
Dominance of Major Heists
Consistent with patterns observed in 2022, a small number of major heists continued to dominate the cryptocurrency landscape in 2023. The top ten attacks accounted for almost 70% of all stolen funds. Several of these attacks surpassed $100 million, with notable incidents targeting Euler Finance in March, Multichain in July, Mixin Network in September, and Poloniex in November.
TRM Labs’ research attributes the decline in hack volumes to three key developments. Firstly, enhanced security measures within the cryptocurrency industry, such as improved real-time transaction monitoring and anomaly detection systems, have played a significant role in deterring hackers. Secondly, increased law enforcement actions and global collaboration among agencies have led to more rapid responses to cyber attacks and improved asset recovery. Lastly, greater coordination among exchanges, wallet providers, and blockchain networks has facilitated better information sharing, enabling a more coordinated defense against cyber threats.
Remaining Vigilant and Adaptable
Despite the encouraging signs of reduced hack volumes, the landscape of cryptocurrency hacks continues to evolve rapidly and remains inherently uncertain. TRM Labs’ research concludes by urging the industry and law enforcement to maintain their vigilance and adaptability in order to sustain this positive trajectory into 2024. The emergence of new, sophisticated threats could easily reverse the current decline in hack volumes, making it imperative for all stakeholders to remain proactive and well-prepared to combat cyber attacks in the cryptocurrency space.
