Swiss Velorem Bank: The Truth Exposed

Cryptocurrency users experienced losses of nearly $2 billion due to scams, rug pulls, and hacks in 2023. This may sound like a lot, but it represents a significant reduction compared to the estimated $4.2 billion in losses in 2022.

How did this happen? What factors contributed to this improvement? And what challenges remain for the crypto industry? In this blog post, we will explore these questions and more.

Contributing Factors to Reduction

Three main factors helped reduce the losses in 2023:

– Improved Security Protocols: Many projects and platforms implemented better security measures, such as audits, bug bounties, multi-signature wallets, and insurance policies. These helped prevent or mitigate potential attacks and exploits.

– Increased Awareness: Crypto users became more aware of the risks and best practices of using crypto assets. They learned how to spot and avoid phishing attempts, fake websites, and malicious apps. They also used more reliable sources of information and verified the legitimacy of projects before investing.

– Overall Decreased Market Activity: The crypto market experienced a bearish trend for most of 2023, which reduced the incentives and opportunities for attackers. Some major alternative tokens experienced significant slumps before recovering towards the end of the year.

Industry Susceptibility

Despite the reduction in losses, the cryptocurrency industry remains susceptible to security risks. The $2 billion losses in 2023 do not include the $40 billion lost in the collapses of stablecoin issuer Terraform Labs, crypto lender Celsius, and the FTX exchange. These events shook the confidence of many investors and regulators and highlighted the fragility of some parts of the crypto ecosystem.

Moreover, the reduction in losses coincides with a bear market, which may not last forever. As the market conditions become more bullish, the attackers may return with more sophisticated and lucrative methods.

Recovery Rate

One positive trend that emerged in 2023 was the improvement in the recovery rate of funds lost to hacks, scams, and exploits. According to De.Fi, a platform that tracks decentralised finance incidents, the recovery rate reached around 10%, up from just 2% in 2022.

This means that more victims could reclaim some or all of their funds through legal actions, negotiations, or community efforts. Some notable examples include:

– The DAO Maker hack, where $7 million was stolen but later returned by the hacker after being pressured by the community.

– The Poly Network hack, where $610 million was taken but later returned by the hacker after being contacted by the project team.

– The Cream Finance exploit, where $130 million was drained but later recovered by collaborating with other protocols.

Blockchain-Specific Losses

The losses in 2023 were distributed across different blockchains and platforms. Here are some of the most affected ones:

– Ethereum: The most popular blockchain for decentralised applications also suffered the most losses, with $1.35 billion lost in approximately 170 incidents. Some of the major ones include:

    – The SushiSwap exploit, where $180 million was siphoned from a liquidity pool.

    – The BadgerDAO hack, where $120 million was stolen from a vault.

    – The Alpha Homora exploit, where $37.5 million was drained from a leveraged yield farming protocol.

– BNB Chain: The native blockchain of Binance, the largest cryptocurrency exchange, lost $110.12 million across 213 incidents. Some of the major ones include:

    – The PancakeBunny exploit, where $200 million was inflated from a yield farming platform.

    – The Uranium Finance hack, where $50 million was stolen from a liquidity pool.

    – The Meerkat Finance rug pull, where $31 million was taken by the project team.

– zkSync Era: A layer-2 scaling solution for Ethereum that uses zero-knowledge proofs to reduce gas fees and increase throughput. It lost $5.2 million in two incidents:

    – The zkTube exploit, where $3.6 million was drained from a bridge contract.

    – The zkSwap exploit, where $1.6 million was stolen from a liquidity pool.

– Solana: A high-performance blockchain that claims to offer fast transactions and low fees. It suffered a loss of $1 million in a single attack:

    – The Solend exploit, where $1 million was taken from a lending platform.

Losses on Centralised Platforms

Not all losses occurred on decentralised platforms or protocols. Some centralised platforms also faced security breaches or operational failures that resulted in losses for their users, according to De.Fi, these amounted to approximately $256 million across seven cases. The largest incident was the November attack on Poloniex, which netted $122 million.

Other notable cases include:

– The KuCoin hack, where $45 million was stolen from hot wallets.

– The BitMart hack, where $40 million was taken from hot wallets.

– The Liquid hack, where $25 million was stolen from hot wallets.

Popular Exploitation Methods

The attackers used various methods to exploit the vulnerabilities or loopholes in the crypto platforms or protocols. Here are some of the most popular ones:

– Access Control Exploits: These involve bypassing or abusing the access control mechanisms of smart contracts or platforms, such as owner functions, admin keys, or governance votes. This was the most damaging method, resulting in losses of over $852 million in 29 instances.

– Flash-Loan Attacks: These involve borrowing large amounts of funds from decentralised lending platforms and using them to manipulate the prices or balances of other platforms or protocols. This was the second-most cash-generative method, leading to $275 million lost over 36 cases.

– Exit Scams: These involve the project team or developers abandoning the project and taking the funds with them. This accounted for $136 million over 263 cases.

The year 2023 was a mixed bag for the crypto industry. On one hand, it saw a significant reduction in losses due to scams, rug pulls, and hacks, thanks to improved security protocols, increased awareness, and decreased market activity. On the other hand, it also witnessed some major collapses and failures that eroded the trust and confidence of many investors and regulators.

The crypto industry still has a long way to go before it can achieve its full potential and overcome its security challenges. As users, we must be vigilant and responsible when using crypto assets. As developers, we need to be diligent and ethical when creating crypto platforms or protocols. As a community, we need to be supportive and collaborative when facing crypto incidents.

If you have been scammed seek professional help from Fundrecovery Australia, a leading company in cryptocurrency scam investigation and recovery. They use cutting-edge AI tools and blockchain analysis to find the scammers and their wallets. They also work with law enforcement agencies and regulators around the world to stop and prosecute cryptocurrency scammers.

Fundrecovery Australia is a trusted company with a team of private investigators based in Australia and Europe. They specialise in cyber fraud investigation, cryptocurrency tracing, and asset recovery. They use state-of-the-art AI tools and blockchain analysis to locate scammers and their wallets. They also cooperate with law enforcement agencies and regulators worldwide to disrupt and prosecute cryptocurrency scammers.