Such a trend has increased exponentially this year, leaving many wondering if hackers are supporting the growth of cryptocurrency by spotting vulnerabilities.
The first half of 2023 has brought an unexpected twist for the crypto market, which has always been a favorite target for cybercriminals. However, as the number of crypto hacks increased at an alarming rate, a surprising trend began to emerge among hackers as they now began to return stolen funds.
Hackers Stole Over $700 Million from 260 Crypto Projects
In the first quarter of 2023, cryptocurrency attacks resulted in approximately $400 million in theft, spanning nearly 40 incidents. This represents a substantial 70% decrease, as compared to the corresponding period in 2022.
Interestingly, the total value stolen through crypto hacks in the first quarter of 2023 was less than any quarter in the previous year. The decline in the amount stolen was noticeably steeper than the drop in cryptocurrency prices over the same time period.
During the second quarter of 2023, cryptocurrency hacks and exploits caused the loss of more than $300 million in digital assets. The quarter saw a total of 212 security breaches.
These incidents resulted in malicious entities extracting a total of $313,566,528 from Web3 protocols. Compared to the second quarter of 2022, which saw a loss of $745 million due to attacks and exploits, this quarter highlighted a 58% reduction in the total amount lost.
Hackers Continue to Return Funds: Curve Exploiter Supports Project
In an interesting trend, hackers have been progressively returning stolen funds, opting instead for a “white hat” bounty offered by compromised projects.
In 2023, the victims of these attacks managed to recover almost half of the stolen funds. The perpetrator who siphoned $61 million from the decentralized exchange, Curve Finance, partially returned the stolen cryptocurrency, following conversations with one of the victims on Friday.
In a message associated with an Ethereum Blockchain transaction, the criminal asked Alchemix, one of the victims of the theft, to verify the protocol address for the return of the assets. Shortly thereafter, the individual transferred nearly $10 million worth of Ether (ETH) and alETH to Alchemix’s multi-signature wallet through various transactions, as evidenced by Blockchain data on Etherscan.
Additionally, JPEG’d, a protocol for non-fungible tokens (NFTs) and decentralized finance (DeFi), has verified the return of 5,495 Ether, valued at approximately $10 million at current rates, by hacker Curve Finance. The hacker, who had stolen the funds on July 30, received a reward of 610.6 ETH (about $1.1 million) in exchange for restoring the stolen assets.
High Profile Enforcement Cases and Stringent Regulations May Be the Explanation
One plausible reason for this trend could be the increasing regulatory scrutiny of crypto hacks, along with several high-profile compliance cases. The case of Avraham Eisenberg, recognized as the first individual arrested for a DeFi exploit, could be acting as a deterrent. An alternative hypothesis could be that hackers are showing sympathy for crypto projects and helping their development.
This drop in cryptocurrency thefts is probably only a short break and not a lasting change. The way crypto hacks work, how much thefts have slowed down, and what we’ve learned from past patterns gives a better idea of what’s going on.
By Leonardo Pérez
