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Barely halfway and October’s the ‘biggest month’ in crypto hacks: Chainalysis

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While 2021 was the biggest year on record for crypto hacks, 2022 could “likely” beat the record “at this rate” according to Chainalysis.

Blockchain analytics firm Chainalysis has labeled October 2022 as “the biggest month in the biggest year ever for hacking activity” with the total hacked value for the month nearly reaching $718 million.

Despite not being more than halfway through the month, Chainalysis said 11 different hacks on decentralized finance (DeFi) protocols had seen hundreds of millions exploited.

Four exploits alone took place on Oct. 11 worth around $122 million. Hackers siphoned $200,000 in crypto using a smart contract from crypto wallet Rabby Wallet, $1.89 million from blockchain QANplatform’s Ethereum (ETH) bridge, $2 million from TempleDAO, and a $118 million exploit on the Solana (SOL)-native Mango Markets.

Chainalysis says 2021 was the biggest year for blockchain-based hacks on record both in terms of total value hacked and the total number of hacks, but at the current rate, 2022 could “likely surpass” last year's figures as over $3 billion has been exploited across 125 hacks so far.

2/ At this rate, 2022 will likely surpass 2021 as the biggest year for hacking on record. So far, hackers have grossed over $3 billion dollars across 125 hacks. pic.twitter.com/vgT3pz2iOu
— Chainalysis (@chainalysis) October 12, 2022

The firm says it’s seeing a shift in where exploits are taking place too.

In 2019 most hacks took place on centralized cryptocurrency exchanges but as those companies increased security, the huge majority of hacks, around 90% in 2022, have taken place on DeFi protocols.

The biggest target for hackers is cross-chain bridges with three bridges targeted this month accounting for 82% of October’s losses according to Chainalysis, the largest of these bridge hacks was a roughly $100 million exploit in the bridge between crypto exchange Binance’s BNB Smart Chain and Beacon Chain.

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Illicit crypto usage as a percent of total usage has fallen: Report

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AML

A rapidly growing crypto market means that hacks and scams are accounting for less overall activity, and their percentage of total usage continues to decline.

Illicit cryptocurrency activity in 2021 and the first quarter of 2022 has declined as a percentage of overall crypto activity, according to blockchain forensics firm CipherTrace.

The cryptocurrency industry has long held a reputation in some jurisdictions as a haven for illegal activity. However, CipherTrace estimates that illicit activity was between 0.62% and 0.65% of overall cryptocurrency activity in 2020. The firm reported that it has now fallen to between 0.10% and 0.15% of overall activity in 2021.

In its Cryptocurrency Crime and Anti-Money Laundering Report released June 13, CipherTrace outlined that the top ten decentralized finance (DeFi) hacks in 2021 and Q1 2022 netted attackers $2.4 billion.

Over half of that figure came from just two events, the largest being the late March 2022 Ronin Network exploit worth about $650 million and the $610 million August 2021 hack of the Poly Network, most of which was returned by the anonymous hacker.

Within a similar time period, anti-money laundering (AML) related fines in the banking sector increased dramatically with 80 institutions fined in 2021, up from just 24 in 2020 according to Kyckr.

While the total dollar amount of the fines fell from 2020, last year saw the banks pay $2.7 billion worth of fines for AML or Know Your Customer (KYC) related violations, the largest single fine totaling around $700 million.

While significant sums have been exploited in crypto, CipherTrace detailed the rapidly expanding crypto ecosystem, noting the total crypto market activity for 2020 was around $4.3 trillion, which grew to approximately $16 trillion of activity just in the first half of 2021.

CipherTrace says that the growth of the crypto market also brings with it increased scrutiny from the world's regulators, who are “starting to take decisive action to ensure that the space isn’t just a modern-day wild west.”

Some of the most significant regulatory events cited in the report include the United States President Biden’s crypto executive order in March to study blockchain technology, Dubai establishing a virtual assets regulator, and the European Union’s proposed anti-money laundering laws.

CipherTrace added organizations are going to have a “very real incentive to shape up” or face “heavy losses at the hands of the government,” adding it expects the threats existing in crypto will be the focus of future regulatory efforts.

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Hacker bungles DeFi exploit: Leaves stolen $1M in contract set to self destruct

April 22, 2022 Coin Telegraph

Hacker bungles DeFi exploit: Leaves stolen M in contract set to self destruct

attacker

A hacker apparently so thrilled by a successful theft left behind over $1 million in a smart contract that was set to destruct, permanently ensuring the crypto could never be moved.

In a rare comedic bungle among DeFi exploits, an attacker has fumbled their heist at the finish line leaving behind over $1 million in stolen crypto.

Just after 8AM UTC on Thursday April 21st, blockchain security and analytics firm BlockSec shared it had detected an attack on a little known DeFi lending protocol called Zeed, which styles itself a “decentralized financial integrated ecosystem”.

The attacker exploited a vulnerability in the way the protocol distributes rewards, allowing them to mint extra tokens which were then sold, crashing the price to zero, but netting just over $1 million for the exploiter.

Blockchain analytics firm PeckShield noted the stolen crypto was transferred to an “attack contract”, a smart contract which automatically and quickly executes the found exploit.

#PeckShieldAlert It appears that @zeedcommunity suffered an exploit. The exploiter gained ~$1m. The gains currently sit in the attack contract. https://t.co/bSHHGM623Q @peckshield https://t.co/jXVj0oGI8B
— PeckShieldAlert (@PeckShieldAlert) April 21, 2022

However the attacker was apparently so excited by their successful heist that they forgot to transfer over $1 million worth of stolen crypto out of their attack contract before they set it to self-destruct, permanently and irreversibly ensuring the funds can never be moved.

Interesting. The hacker kills the contract, but forgets to transfer the profit. https://t.co/HbS2fiztuc https://t.co/uApZyK8Uym pic.twitter.com/FwpZweNLHU
— PeckShield Inc. (@peckshield) April 21, 2022

Using a blockchain scanner to view the attack contract address shows that $1,041,237.57 worth of BSC-USD Binance-Peg token is forever stuck in the contract and the successful self-destruction of the contract was confirmed at 7:15AM UTC on April 21.

It's one of the more bizarre turns of events since the Polygon hacker did an “Ask Me Anything” using embedded messages on Ethereum(ETH) transactions after stealing $612 million from the protocol in August 2021. The question and answer session revealed the attacker hacked “for fun” and thought “cross-chain hacking is hot.”

This latest hack is on the smaller end regarding the amount stolen, and other DeFi protocol hacks have seen hundreds of millions siphoned off as with the recent Ronin bridge hack where attackers made off with over $600 million.

Other notable DeFi exploits include the $80 million worth of crypto stolen from Qubit Finance in January where attackers tricked the protocol into believing they had deposited collateral, allowing them to mint an asset representing a bridged crypto.

DeFi marketplace Deus Finance was exploited in March when hackers manipulated the price feed of a pair of stablecoins resulting in the insolvency of user funds, netting the hackers over $3 million.

stolen crypto

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