The Cost of Crypto Hacks in August 2021

The Cost of Crypto Hacks in August 2021

The crypto space faced significant challenges in August 2021, with over $313 million in losses reported due to more than ten different hacking incidents. Shockingly, 93.5% of the stolen funds were a result of just two major phishing attacks during that period. These incidents, as highlighted by blockchain security firm PeckShield, cumulatively accounted for a loss of approximately $293.4 million.

In the first major phishing attack, an unidentified whale lost over 4,000 bitcoin (BTC) valued at around $238 million due to falling victim to a phishing scam. The funds were swiftly transferred across various platforms, including THORChain and Railgun, complicating any potential recovery efforts. The second attack involved a large crypto holder who had $55.4 million worth of Dai (DAI) swiped from their wallet without consent, with the culprit exchanging the stolen assets for Ethereum (ETH).

Exploits and Vulnerabilities

The Ronin Network also suffered a significant exploit, with unauthorized crypto transactions amounting to $5.1 million. Despite recovering $12 million from the attacker, a sizable sum was still lost. Furthermore, decentralized finance (DeFi) protocol Nexera faced a theft of $1.83 million due to manipulation of its smart contract. These incidents shed light on the ongoing vulnerabilities within the crypto ecosystem.

A report by bug bounty platform Immunefi revealed that the crypto industry had already lost $1.21 billion in digital assets due to hacks and rug pulls year-to-date. Interestingly, despite the substantial losses in August, the total amount lost was comparably lower than in previous months. This trend provides some hope for improved security measures in the future.

One of the most notable incidents in July was the hacking of WazirX, an Indian crypto exchange that lost $234.9 million from one of its multisig wallets. In response to the breach, the company has initiated a phased plan to restore its financial operations. This includes filing a moratorium with the Singapore High Court under the city-state’s Insolvency, Restructuring, and Dissolution Act of 2018.

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During the moratorium period, WazirX is shielded from actions by creditors, such as winding-up proceedings and security enforcement. The exchange aims to undergo a structured restructuring process where the impact of the exploit will be shared among users classified as unsecured creditors.

Overall, the events of August 2021 underscore the importance of robust security measures within the crypto industry. While significant losses were incurred, it is crucial for exchanges and platforms to learn from these incidents and bolster their defenses against potential threats in the future.

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