The cryptocurrency space has long been vulnerable to hacks and scams, but in 2024, losses in just the first three quarters have already surpassed the total for all of 2023. So far, $2.1B has been lost, marking 2024 as the year with the highest recorded losses to date.
According to the Web3 cybersecurity company Cyvers, these occurrences highlight the need for stronger regulations and better security measures to mitigate rising threats, such as vulnerabilities from quantum computing and AI-driven attacks.
Centralized finance (CeFi) platforms were hit particularly hard, with much of the impact coming from five significant attacks in the second quarter of the year. CeFi saw a staggering 984% increase in losses compared to the same period last year. The largest of these was the hack of the Japanese exchange DMM, where $305M in Bitcoin was stolen. Following this was the Turkish exchange BtcTurk, which suffered a $55M loss.
Cyvers emphasized that CeFi platforms urgently need regulatory oversight and stronger access control. “The surge in CeFi vulnerabilities underscores the need for improved access control mechanisms and regulatory oversight,” the company said.
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DeFi was not spared either, with $171.3 million lost across 62 incidents in the second quarter alone, primarily on Ethereum and the BNB Smart Chain. However, this represents a 25% decrease in losses compared to last year, indicating some improvement in security. Still, due to the complex nature of smart contracts and decentralized protocols, DeFi remains vulnerable.
Cyvers stressed the need for the crypto industry to be proactive, not reactive, in addressing emerging security threats. The company urged global regulators, such as the International Organization of Securities Commissions, to focus on key areas, including:
- Creating new regulatory frameworks to tackle risks from AI and quantum computing,
- Developing real-time threat detection.
- Implementing cross-chain security protocols.
Overall, DeFi platforms were targeted more than CeFi. Access control weaknesses led to $1.6B in losses across 51 incidents in DeFi, while CeFi experienced $742.6M in losses across 16 incidents during the same period. Additionally, smart contract vulnerabilities accounted for $380.4M lost in 79 incidents
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