Crypto Market Shows Resilience in Q2, Recovers 77% of Stolen Funds
The cryptocurrency market has proven its resilience by achieving a record recovery rate of 77% for stolen funds in the second quarter of 2024, according to the Web3 Security Report Q2 2024 by Hacken.
Out of the total $512.9 million lost, $347.4 million of stolen crypto funds were successfully recovered or frozen in Q2. This marks the second consecutive quarter with a positive recovery trend amidst the alarming rate of theft in the crypto industry.
The report also highlights a decline in the number of hacks compared to the previous quarter, with the total number of incidents dropping from 67 to 41. However, financial losses remain a significant concern, as Q2 losses amounted to $512.9 million, nearly matching the total losses for all of 2023.
Access control-related breaches were the most prevalent type of attack in Q2, resulting in the highest financial losses. The DMM Bitcoin incident alone accounted for a staggering $305 million loss, highlighting the severe impact of compromised security in centralized finance (CeFi) platforms.
Other notable attack vectors included flash loan attacks, which caused $84.36 million in losses, and rug pulls, resulting in $23.1 million in losses.
Interestingly, CeFi platforms, despite being perceived as secure, were not immune to significant breaches. The Rain Exchange hack, caused by a failure in securing private keys, led to a loss of $14.8 million.
Token projects also faced vulnerabilities due to their rapid growth and the complexity of smart contracts. Many new projects prioritize quick launches over thorough security audits, resulting in overlooked vulnerabilities. Moreover, attackers have become more sophisticated in their social engineering tactics, making it easier for them to gain access to critical administrative accounts and sensitive information.
In addition to security concerns, cryptocurrency scams have been on the rise on the X platform. Scam Sniffer, a web3 anti-scam company present on X, revealed that account impersonation on X.com leads to a loss of nearly $50 million each month. The confusion surrounding the new owner’s controversial paid verification service may contribute to the vulnerability of the general public to impersonation scams.
Binance co-founder Yi He and rapper 50 Cent have also expressed concerns about the proliferation of cryptocurrency scams on X. It remains to be seen whether Elon Musk, the platform’s owner, will take action to address this issue.
