According to a recent analysis from Chainalysis, the year 2022 was the biggest year ever for crypto hacks, with $3.8 billion stolen from cryptocurrency business, up from $3.3 billion in 2021.
March and October witnessed huge spikes in hacking activities, with the latter becoming the biggest single month ever for cryptocurrency hacks, as $775.7 million was stolen in 32 separate attacks.
Reports reveal that on October 6, hackers hit a blockchain associated with the world’s biggest crypto exchange Binance, making away with $566 million in BNB. The exploit targeted the cross-chain bridge BSC Token Hubs, as these hackers essentially conjured tokens out of nothing using artificial withdrawal proofs.
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It was first reported that $100 million was hacked, and then the number went up drastically, which saw about 2 million tokens of BNB worth about $570 million withdrawn.
Binance co-founder and CEO Changpeng Zhao commonly known as “CZ”, announced that the hack happened on a cross-chain bridge where users transfer digital assets from one blockchain to another. The hackers were able to create 2 million BNB tokens out of thin air.
The attacker was able to exploit a vulnerability in the Binance Bridge, and they sent themselves one million BNB tokens twice in a row. He revealed that the hack happened because of a bug in the smart contract where hackers could forge transactions and transfer funds into their wallets.
Also, crypto investors lost nearly $4 billion to hackers in 2022, which saw early crypto investor and the general partner at Fenbushi Capital, Bo Shen lose $42 million in a wallet hack.
The cryptocurrencies stolen from his wallet include USD Coin, Tether, Ether, and Bitcoin, which occurred as a result of the compromise of the wallet’s recovery phrase.
Most of the hacks that occurred in 2022, stemmed from cross-chain bridge protocols specifically. Cross-chain bridge protocols are technologies that allow for the transfer of assets of information between different blockchain networks.
In the last crypto hack reported, it was revealed that decentralized finance (DeFi) protocols in the year 2021 became the primary target of crypto hackers, which intensified in 2022.
Defi, which is one of the fastest-growing, most compelling areas of the cryptocurrency ecosystem, largely due to its transparency, accounted for 82.1% of all cryptocurrency stolen by hackers, a total of $3.1 billion, up from 73.3% in 2021. And of that $3.1 billion, 64% came from cross-chain bridge protocols specifically.
According to the report, the majority of the digital funds stolen were from cross-chain bridge applications. Also, reports reveal that North Korea-linked hackers such as those in the cybercriminal syndicate Lazarus Group have been by far the most notorious cryptocurrency hackers over the last few years.
In 2022, they shattered their records for theft, stealing an estimated $1.7 billion worth of cryptocurrency across several hacks we’ve attributed to them. Most experts suggest that the North Korean government is using the stolen funds to fund its nuclear weapons programs.
Wallet hacks and digital theft are significant concerns for individuals and businesses who transact with cryptocurrencies. As a result of its meteoric rise in value over the years, the cryptocurrency market has caught the eye of both legitimate investors and malicious hackers.
Hacking has become a common challenge in crypto, while different players in the crypto industry continue to evolve and innovate new ways to curb these thefts, crypto traders are being advised to desist from storing all their single assets in a single wallet. To be on the safe side, they can decide to use one wallet for transactions and one wallet for saving, to mitigate their losses in case a hack occurs.
Also, crypto traders/ investors are advised to be cautious about clicking any suspicious links or emails, as Cybercriminals often use this method to steal cryptocurrency from those who are not aware of this method.