Crypto Hack Losses Hit Lowest Point Since 2021: What’s Behind the Decline?

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The cryptocurrency market, particularly in April 2024, reported a vast drop in hacking, exploits and scam losses, making it the lowest figure since 2021. As reported by the  Blockchain security platform CertiK, the total losses for the past month are estimated to be approximately $25.7 million, which indicates a decrease of 141% compared to the losses of the previous month.

Key Takeaways from the Report:

Total Losses in April 2024:Approximately $25.7 million.

Nature of Losses:

1. Exploits: 

Exploits accounted for the majority of losses, totalling around $21 million. Exploits typically involve taking advantage of vulnerabilities or weaknesses in smart contracts or blockchain protocols to siphon off funds.

2. Exit Scams: 

Exit scams, where fraudulent projects disappear after raising funds, contributed to losses of approximately $4.3 million. These scams deceive investors by promising high returns or innovative solutions before abruptly ceasing operations and absconding with the invested funds.

3. Flash Loan Attacks: 

Flash loan attacks resulted in relatively minor losses of about $129,000. Flash loans are a type of uncollateralised loan obtained within a single transaction block and exploited for financial gain.

Despite the overall positive trend, April still witnessed several notable hacks and scams resulting in significant losses. One incident involved the Condom meme coin, which misled users by advertising a fake presale address on the Solana network, leading to a loss of around $933,000.

Another prominent attack targeted the Bitcoin Lightning Network exchange FixedFloat on April 1, resulting in a loss of approximately $3 million. Notably, this was the second time FixedFloat fell victim to a hack in 2023.

Additional Insights by Peckshield Alerts

In a different but reliable analysis of crypto hack losses in April 2024 done by an on-chain security firm, PeckShield, hack losses reached $60.2 million, which is, in fact, way below the $187.6 million posted in March. 

It was pointed out in the report that the losses related to April decreased to $360.8 million compared to those of the same period last year, which had amounted to $440.9 million.

Distribution of the losses in April can be attributed to almost 40 separate hacks, with the largest of which belongs to Hedgey Finance, a token infrastructure provider, who lost $44.7 million as a result of a vulnerability on the Arbitrum Network. The market participants such as FixedFloat, and Pike Finance also underwent large losses.

What Led to This Massive Decline??

Several key factors contributed to this notable decline in losses attributed to hacks, exploits, and scams within the cryptocurrency ecosystem.

1. Reduction in Private Key Compromise

The fact that many of the crypto hacks in April witnessed a significant fall in fights against private key compromises is the main reason behind the downturn in the number of hack losses in the month. The violation of the private key is certainly one of the vital cryptocurrency vulnerabilities since it gives the thieves the power of free control over digital wallets. 

As it was earlier reported in March, these 11 cases were related to the private key compromise targeting protocols. This declined greatly and the number remained at only three cases in April. The public key compromises dropped to the largest extent for the past month which, in turn, led to the most substantial reduction of the total hacker withdrawal.

2. Enhanced Security Measures and Awareness

The total reduction in hack-related losses can also be tied to the stiff security measures that are being put in place and not forgetting that there is an increased awareness amongst crypto users and platforms. They are updated more often and as a result, things are more secure with many people auditing and checking for vulnerabilities.

3. Continuous efforts to combat scams and frauds

Combined efforts of regulatory organizations, cybersecurity companies and industry participants to crack down on the scams and fraud in the crypto realm has a role in fewer hacks. Agencies have broadly stepped up the enforcement actions, increased their capacity to monitor and finally collaborate. The ability to leave no stone unturned in uncovering and dismantling scams poses fewer avenues for criminals to operate.