January 2024 saw a sixfold increase in the amount lost to web3 hackers who continue to exploit loopholes in smart contract codes employed by crypto and defi protocols.
Hackers carted away over $126 million from several attacks on decentralized finance platforms last month, according to AMLBot Co-Founder and CEO Slava Demchuk. Incidents primarily stemmed from a handful of vulnerabilities ranging from multi-sig wallet compromises to loan attack vectors, Demchuk added.
One of the largest hacks in January was on Orbit Bridge, a cross-chain protocol that lost north of $80 million to bad actors. Ozys, the South Korea-based company behind the service, suspects a former employee was involved in the attack.
However, the crypto fraud-detection expert noted that cybersecurity within the industry is improving year-on-year, as indicated by the decline in illegal digital asset activity.
Every year, the large amount of money stolen, sometimes reaching billions of dollars, can be surprising and worrying. But the main trend is clear – less than 1% of crypto activities involve illicit actions.
Slava Demchuk, Co-Founder and CEO, AMLBot
A Chainalysis report backs up this assertion. The company noted a 39% reduction in stolen wealth transactions via cryptocurrencies and blockchain networks.
Commenting on why these defi vulnerabilities persist even as global crypto adoption ascends and institutional demand has increased, Demchuk told crypto.news that blockchain’s decentralized nature adds a layer of complexity that requires constant improvement in security protocols by projects to mitigate and manage risks.
In some cases, he noted, projects fall short of industry-standard security measures, and in other scenarios, hackers have engineered novel strategies to bypass systems aimed at safeguarding users.
Enhanced security measures such as real-time transaction monitoring and increased collaborative efforts by global law enforcement are two key areas in tackling digital currency-related crime, per Demchuk.
AMLBot’s boss added that more communication between crypto exchanges, wallet providers, and blockchain developers should help to stem the issue by facilitating the timely sharing of threats and suspicious activity.
Eventually, this collaboration should lead to the establishment of a suitable infrastructure that accommodates the involvement of all stakeholders. Our belief is that the cryptocurrency industry will gradually attain comprehensive security over time.
Slava Demchuk, co-founder and CEO, AMLBot