A Retrospective Look at Q2 2024 as Crypto Scam Losses Keep Soaring

Research from blockchain security platform Immunefi shows that crypto losses from hacks and scams more than doubled in the second quarter of 2024 against the same period the year before. Comparatively to only $220 million in Q2 of 2023, Q2 lost about $572 million. The most losses in the quarter came from centralized trade tips.

Hacker and scam losses had dropped before the second quarter; Immunefi notes a 23% drop in Q1. This fall persisted through April and most of May; nevertheless, losses sharply rose at the end of May and June.

The May 31 private key hack of crypto exchange DMM, which emptied $305 million worth of Bitcoin from the exchange, accounted for the largest single loss in the second quarter.

The June 22 BtcTurk breach resulted in more than $55 million of losses. According to the study, these two best tips together accounted for over 62% of all quarter losses. About 70% of the total losses in the quarter came from centralized protocols and exchanges, which suffered almost $401 million.

Still, the proportion of effective strikes against these targets was small overall. While there were 62 events of successful exploits or scams employing distributed protocols, just five attacks against centralized systems succeeded.

A 25% drop from Q2 2023, decentralized financial systems lost $171 million during the quarter.

With 71% of all losses attributed to Ethereum and the BNB Smart Chain, they remained the top two networks sought after by hackers and con artists.

Still, several data points point to Ethereum layer 2s, which may become increasingly popular among hostile actors. With four incidents and losses totalling 5.5% of the overall network, Arbitrum was the third most targeted one. Blast and Optimism recorded three incidences apiece. All other networks combined to account for 15% of all losses, with just one event.

According to Immunefi founder Mitchell Amador’s analysis, the losses this quarter are a grim reminder of the significance of centralized exchange infrastructure security. He went on to state: 

“This quarter highlights how infrastructure compromises can be the most devastating hacks in crypto, as a single compromise can lead to millions in damages. This was evident during this quarter, where losses surged primarily due to hacks targeting CeFi infrastructure, surpassing DeFi, despite a smaller number of hacks in that sector. Robust measures to safeguard the entirety of the ecosystem are crucial.”

Security experts later found some of the money pilfers taken in the second quarter. For instance, one assailant who used the Gala Games system returned almost all of the money. Though this was never verified, several sources said the assailant had linked to his wallet without a virtual private network, disclosing his IP address and so open to possible prosecution.

Immunefi says Alex Labs, Bloom, and Yolo Games also recovered most of the money lost from their exploits. According to the report, these recovered monies accounted for five percent of the quarter’s total loss.

Conclusion

In conclusion, the second quarter of 2024 has starkly highlighted the escalating financial toll of crypto hacks and scams, which more than doubled compared to the previous year. Centralized exchanges bore the brunt of these losses, with high-profile incidents like the DMM exchange hack standing out as significant contributors.

Despite initial declines earlier in the year, vulnerabilities in centralized systems proved costly by the quarter’s end. The resurgence of attacks on Ethereum and BNB Smart Chain networks underscores ongoing security challenges. At the same time, the recovery efforts by affected platforms provide a glimmer of hope amid these concerning trends. As the crypto landscape evolves, the imperative for robust security measures across all platforms remains critical to safeguarding investor funds and maintaining trust in the ecosystem.