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A recent report by Immunefi highlights a significant rise in cryptocurrency losses due to hacks and rug pulls in 2024. Despite a bullish market, the sector saw $473 million in losses, underscoring the urgent need for improved security measures.
Crypto Market Hits All-Time Highs Amid Bitcoin Halving and ETF Sanctions, But Losses from Hacks and Rug Pulls Surge
As a result of regulatory breakthroughs and significant events such as the Bitcoin (BTC) Halving and the sanction of crypto exchange-traded funds (ETFs) in the United States and Hong Kong, the ongoing bull run in the cryptocurrency market has pushed prices to all-time highs. Nevertheless, with this favorable trend, the sector has also encountered a surge in losses attributable to breaches and carpeting pulls.
As reported by the security services platform Immunefi (via Bitcoinist), the cryptocurrency market experienced a decline in losses resulting from breaches and rug pulls during the first months of 2024 compared to the corresponding period of the previous year. From this point forward, the cumulative loss decreased by 20% to $473 million from $595 million in 2023.
Lonely, in May 2024, losses reached $52 million, reflecting a 12% decline compared to the $59 million incurred in May 2023. Also, in May 2024, losses were 28% lower than in the preceding month.
As per the incidents in May 2024, most losses were attributed to two initiatives. SonneFinance, a decentralized lending protocol, lost $20 million, whereas Gala Games, a cryptocurrency-based gaming initiative, lost $21 million.
According to the report, exploits predominantly targeted decentralized finance (DeFi) initiatives in May 2024, whereas centralized finance (CeFi) remained unaffected by significant attacks throughout the same time frame.
Ethereum and BNB Chain Bear Brunt of Crypto Breaches, Highlighting Urgent Need for Enhanced Security
Additionally, the security services platform discovered that breaches remain the primary source of financial loss, with 14 incidents in May 2024 accounting for $50 million. In contrast, fraud incidents during the same period constituted a mere 3.3% of total losses, amounting to $1.7 million.
In May 2024, the chains that received the most attention were Ethereum (ETH) and the Binance Smart Chain (BNB), which accounted for 62% of the losses the targeted chains incurred.
Significantly, out of the total losses incurred, four occurred on BNB Chain, accounting for 19% of the total, whereas Ethereum encountered nine incidents, accounting for 43% of the total.
Additional chains, including Polygon (MATIC), Base, Arbitrum (ARB), Solana (SOL), The Open Network (TON), Blast (BLSTR), Fantom (FTM), and Optimism (OP), each experienced a single incident, accounting for 4.8% of their respective totals.
In conclusion, as the cryptocurrency market experiences a mature bull run in 2024, increased losses from hacks and rug grabs pose a challenge to the industry. Although losses have been reduced compared to the preceding year, the overall magnitude remains a substantial cause for apprehension.
Undoubtedly, the prevalence of breaches surpassing that of fraud emphasizes the criticality of fortifying security protocols and rectifying susceptibilities to safeguard investor capital. Prioritizing security as the market evolves will be essential to preserve investor confidence and sustain the expansion of the cryptocurrency industry.
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