Value of Stolen Assets in Exploits Decreased by 70% Compared to Previous Year, Increased Recovery of Funds (Report)

A significant number of notable assaults on the cryptocurrency ecosystem occurred last year, targeting a wide range of entities from Phantom wallets to the smart contracts themselves.

A frequent target was cross-chain bridges, which enabled hackers to abscond with substantial rewards, particularly highlighted by the Harmony incident.

Significant Reduction in Attacks

Nonetheless, circumstances appear to be shifting, as indicated by a recent report from cybersecurity analysts at TRMLabs.

The report reveals that the overall value taken through exploits and hacks has dropped by 70% year-over-year since the first quarter of 2022. While this might seem skewed, given that Q1 2022 witnessed the $600 million Ronin bridge breach, the findings remain consistent even when considering the entirety of 2022. In total, nearly $3.7 billion in assets were misappropriated by malicious actors last year.

In fact, the value stolen during Q1 2023 was lower than in any quarter of 2022. In the preceding quarter of 2023, the cumulative value taken amounted to approximately $400 million across nearly 40 distinct attacks – with around two-thirds attributed to the Ronin Bridge incident alone.

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Moreover, the victims of these attacks frequently manage to recover a portion of the stolen assets, which is already, on average, one-third of what it was a year prior.

“The average size of hacks also experienced a decline in Q1 2023 – falling to USD 10.5 million from nearly USD 30 million in the same quarter of 2022, even as the number of incidents remained comparable (around 40). To date, victims of hacking have reclaimed over half of all stolen funds in Q1 2023.”

Heightened Oversight Mitigates Losses

While it is challenging to pinpoint the exact cause for the reduction in the frequency of attacks – which could range from improved cybersecurity practices, simple disinterest, or a sense of guilt – the analysts at TRMLabs suggest that increased scrutiny from law enforcement may be a primary factor in this trend.

Even in instances where the exploit did not breach hacking regulations, regulators have still intervened for various reasons. For example, Avraham Eisenberg’s “profitable trading strategy” has resulted in issues with the SEC, which has accused him of manipulating securities.

Illegal exploits have also seen a decline. Following the sanctions imposed on Tornado Cash, the most recognized tool for laundering illicit cryptocurrency, all addresses associated with the mixer have been blacklisted, complicating the process for cybercriminals to liquidate the proceeds from their attacks.

However, the analysts caution that this decrease in attacks may be temporary and advise cryptocurrency developers to stay vigilant.

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