$674 Million in Stolen Crypto Reclaimed in 2023

2023 has emerged as a landmark year in cryptocurrency, witnessing a substantial decrease in global cyber thefts and a significant rise in asset recoveries.

According to a report by blockchain security firm PeckShield, the crypto world suffered a loss of $2.61 billion due to hacks and scams in 2023.

While still substantial, this figure marks a notable 27.8% decrease from the previous year’s $3.6 billion losses.

But in a surprising recovery effort, PeckShield’s data reveals that over $674 million was successfully reclaimed from more than 600 large-scale hacks that occurred in 2023. 

Key Takeaways

  • In 2023, cyber thefts in the crypto sector dropped by 27.8% to $2.61 billion, indicating improved industry security measures.
  • A remarkable $647 million was reclaimed from over 600 hacks, a major increase from 2022’s recovery efforts.
  • Despite security enhancements, 67% of crypto losses occurred in DeFi, highlighting its ongoing susceptibility to attacks.

The decline in value stolen may underscore the increasing efficacy of security measures within the crypto ecosystem, ideally signalling a positive shift towards greater digital asset protection and resilience against cyber threats.

This includes the rise of bug bounty programs that hopefully close the doors to exploits in protocols before bad actors get the chance to open them.

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We would be remiss to point out that we would expect lower financial losses due to theft outside of a crypto bull market — but an increase in the value recovered is a positive sign for the industry.

Centralized Entities Fight Back, but DeFi Struggles with Hacks

The recovery of $647 million in assets is a significant leap from the $133 million recovered in 2022 and is primarily attributed to a series of strategic moves within the crypto security domain.

These include proactive and direct negotiations with hackers and the crucial role of collaborations with centralized exchanges, Tether, and law enforcement agencies in freezing and reclaiming funds as soon as they are detected.

Delving deeper into the nature of these cybercrimes, PeckShield’s report highlights that flash loan attacks constituted 40% of the total hacks in 2023. 

And despite the advancements in decentralized finance (DeFi) security, this sector remains a prime target for cybercriminals. 

The report, outlined in the tweet below, indicates that 67% of the total losses occurred within the DeFi space, with the remaining 33% in centralized finance.

 

Moreover, the report delineates the breakdown of losses, with 58% attributed to hacks and 42% to scams. 

This data points to a diversified threat landscape in the crypto world, where technical exploits and deceptive schemes pose significant risks to investors and platforms.

An intriguing shift has been observed in the types of cryptocurrencies targeted by malicious actors – while Bitcoin predominantly dominated the scene for illicit transactions from 2018 to 2021, the following years witnessed a shift towards stablecoins, which started to represent a larger portion of the illegal transaction volume. 

This trend reflects the evolving strategies of cybercriminals as they adapt to the changing dynamics of the cryptocurrency markets.

The Bottom Line

Overall, the analysis by PeckShield not only sheds light on the current state of cybersecurity in the crypto realm but also underscores the ongoing challenges and risks. 

The year 2023 stands as a testament to the crypto community’s resilience and adaptability in combating cyber threats as mainstream adoption becomes the norm in the crypto space. 

However, it also serves as a reminder of the need for continued vigilance and the development of more sophisticated and effective security measures to safeguard against future threats as a mature industry emerges.

At the very least, remember to keep trusted password managers and VPNs close at hand on your crypto journey.

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Sam Cooling

Sam Cooling is a crypto, financial, and business journalist based in London. Along with Techopedia, his work has been published in Yahoo Finance, Coin Rivet, CryptoNews, and Business2Community. His interest in cryptocurrency is driven by a passion for leveraging decentralized blockchain technologies to empower marginalized communities worldwide. This includes enhancing financial transparency, providing banking services to the unbanked, and improving agricultural supply chains. Sam has a Master’s Degree in Development Management from the London School of Economics and has worked as a Junior Research Fellow for the UK Defence Academy.