The first cryptocurrency, Bitcoin, was launched way back in 2009. That means cryptocurrencies are a teenager now and yet it still feels like the Wild Wild West in cryptoland.
It is ironic that cryptocurrency, a new digital currency often touted as being more secure than traditional currencies, has been hacked so frequently. This has been happening since the beginning and 2023 is no different.
A staggering $666 million (the number of the beast, coincidence?) was lost to 125 cyberattacks on crypto projects and their clients in the first half of 2023, according to an analysis by Atlas VPN.
You wanna know what’s crazy? – 2023 is on course to be a better year than 2022. Compared to the same period last year, crypto-related incidents and losses are declining. Imagine that, $666 million swindled in half a year and we are celebrating that things are looking up.
According to the report:
Funds lost to cyber attacks aimed at crypto projects, by target (2023 H1)
- Total – $666,354,302
- ETH ecosystem – $265,237,633
- Polygon ecosystem – $122,685,000
- Wallet – $109,200,000
- Other – $68,208,500
- Exchange – $56,622,628
- BSC ecosystem – $25,137,913
- Curiously, the BTC ecosystem is not on this list. I don’t know why. Could it be that it is more secure? I don’t see how
You can view the full list here.
The Binance Smart Chain (BSC) experienced the highest number of incidents – 30 – leading to financial losses of $25m. However, the Ethereum ecosystem suffered the highest financial losses, $265m from 29 incidents.
Apparently, each successful Ethereum incident nets quite a lot more than a Binance one.
Going back to the total, 22% of incidents were a result of malicious actors exploiting contract vulnerabilities.
Furthermore, 14% of the incidents involved social media hacks that were subsequently utilized for social engineering attacks, ultimately leading to the extraction of funds from unsuspecting victims.
For all the good social media has brought about (can’t think of one at the moment), it sure has been used to relieve us of our hard-earned money effectively.
The above doesn’t sound good but find comfort in the fact that since 2012, hackers and scammers have stolen close to $30 billion in cryptocurrency.
In the preceding section, we were talking about financial losses resulting from the actions of hackers and scammers. Well, there were hundreds of millions lost to crypto projects themselves.
These bad actors set up legit-looking crypto projects only meant to swindle the masses. In the first half of 2023, they made off with $250 million.
The scams that achieved this will be all too familiar to the Zimbabwean who is still reeling from the mythical Zhao fleeing with $1m of their money.
A South Korean crypto scam called “Blockchain for dog nose wrinkles” defrauded 22,000 people out of $127 million. The company promised investors a blockchain app that could identify dogs by their nose wrinkles, but it was actually a Ponzi scheme.
People flocked to the ‘Blockchain for dog nose wrinkles’ project because it promised substantial returns for very low risk.
Then there was CoinDeal, a crypto investment fraud that scammed over 10,000 people out of $45 million. The scammers claimed that CoinDeal was a blockchain technology company that would generate high returns for investors, but no token sale or distribution ever took place.
Fintoch, a blockchain-based financial platform that claimed to be developed by Morgan Stanley, defrauded users out of an estimated $31.6 million. The platform promised users a guaranteed 1% daily return on investment, but the Singaporean government and Morgan Stanley issued warnings in May that it was a scam.
To be honest with you, I am actually relieved, looking at these scams. It shows that Zimbabweans are just as susceptible to these kinds of scams as everybody else. Fintoch guaranteed a 1% return daily and that should have scared off everyone but alas, over $30m was poured into that venture. I can stomach our E-creator losses better after knowing this.
Hold your horses my RBZ friends
I know that the RBZ and other crypto-suspicious people will look at this and conclude that central bank currency is the way to go. Well…
Crypto losses are but a tiny fraction of the losses we can expect from cybercrime. Cyber attacks are bringing in $100 billion in losses to financial institutions, according to the IMF. That’s annually my friend, as opposed to the $30 billion since 2012 that crypto has suffered.
This is all to say, cybercrime is a problem for everyone and when compared to traditional banks, crypto is not doing too badly.
That said, we have to mention that if one loses their cryptocurrency because of some hack, they are out of luck. That money is gone and there is very little chance of recovering any of it.
That’s not the case with traditional banks. They are recognised by their governments and are often bailed out when they suffer catastrophic losses, meaning customers have a better chance of recovering some of their money should the worst happen.
Being Zimbabwean though, I know more people that lost money when traditional banks folded or simply wrote down their funds than those that lost money due to a crypto exchange shutting down. So there’s that.
Anyway, just know there is a risk, wherever you put your money. Even the $425 in your National Mattress Bank account could be stolen, albeit not electronically, but still.