cryptocurrency losses from scams and hacks more than doubled in the second quarter of 2024 compared to the same period the year before.
Scam and exploit losses surged in Q2 as centralized exchanges reversed a prior decline and lost millions of dollars.
Compared to just $220 million in Q2 of 2023, over $572 million was lost in Q2. The majority of the quarter’s losses were attributed to centralized exchange hacking.
Losses from scams and hackers had been decreasing before the second quarter; Immunefi reported a 23% decrease in Q1. This reduction persisted through April and most of May, but losses sharply rose by the end of May and June.
The most significant single loss of the second quarter was caused by the DMM cryptocurrency exchange’s May 31 private critical attack, which caused the exchange to lose $305 million in Bitcoin BTC$61,731.
A further $55 million was lost due to the June 22 BtcTurk breach. According to the research, the combined losses from these two significant hacks were above 62% for the quarter.
During the quarter, losses on centralized protocols and exchanges amounted to almost $401 million, or 70% of the total.
Nonetheless, a tiny portion of all attacks were successful against these targets. Out of 62 instances of successful exploits or scams employing decentralized protocols, only five assaults targeting centralized protocols were successful.
Quarterly losses for decentralized financial protocols came to $171 million, a 25% drop from Q2 2023.
With 71% of all losses, Ethereum and the BNB Smart Chain remained the top two networks targeted by con artists and hackers.
On the other hand, evidence implies harmful individuals are beginning to use Ethereum layer 2s more frequently. The network that was targeted the most, Arbitrum, saw four occurrences and 5.5% of the overall losses. Optimism and Blast both had three occurrences. No incident occurred on the other networks, accounting for 15% of the total losses.
Mitchell Amador, the founder of Immunefi, stated in the study that the losses for this quarter serve as a grim reminder of how crucial the security of centralized exchange infrastructure is.
“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 researchers retrieved some of the money stolen during the second quarter. For instance, the hacker who took advantage of the Gala Games protocol returned almost all the money. Although it was never verified, several sources claimed that the attacker had accessed his wallet without using a virtual private network, disclosing his IP address and putting him at risk of legal action.
According to Immunefi, Alex Labs, Bloom, and Yolo Games, they also retrieved most of the money lost via their exploits. According to the report, these recovered monies made up 5% of the total amount lost during the quarter.