Top 5 Cybersecurity Threats to Watch Out for in Cryptocurrency in 2024

Estimated read time 6 min read

The world of cryptocurrencies, which primarily exists in the digital realm, is faced with numerous ever-changing cyber threats. The risks posed by these threats have caused significant losses to individuals and business organizations.

This article will examine some of the key cybersecurity trends in the cryptocurrency space in 2023, which are expected to continue into 2024 and cause harm to more victims.

Hacking and exploiting vulnerabilities

Cryptocurrency exchanges and various decentralized finance (DeFi) platforms have experienced multiple hacking attacks and exploits in 2023. For example, Mixin Network suffered nearly $200 million in losses due to hacking attacks in September, and Euler Finance suffered a loss of nearly $200 million due to hacking attacks in March. It also suffered a vulnerability attack in March, resulting in a loss of US$197 million.

As of November 2023, blockchain intelligence firm TRM Labs has recorded a total of 160 hacking incidents, a number similar to 2022. However, despite a similar number of incidents, hackers only stole $1.7 billion in Bitcoin (BTC) and other crypto assets, less than half of the amount stolen in 2022. Researchers attribute the reduction in losses to improvements in industry safety measures, increased enforcement and increased industry coordination.

Losses in 2022 vs. 2023

The data also shows that nearly 60% of the total stolen this year can be attributed to infrastructure attacks, in which criminals gain access to servers, networks or software. Other methods include attacking smart contracts (self-executing programs) through code vulnerabilities, protocol attacks, etc.

Proportion of attack types recorded in 2023

At the same time, one hacking incident in 2023 stood out: hackers of the KyberSwap decentralized exchange began demanding the transfer of control of the platform in exchange for the return of crypto assets worth approximately $50 million. The incident has not yet been resolved.

As hackers may continue to target cryptocurrency exchanges (especially centralized exchanges), it is recommended to keep only the amount of crypto assets required for trading on these platforms, while safeguarding greater security through safer options such as hardware wallets. amount of crypto assets.

Fraud

Cryptocurrency scams form a broad category that covers various sub-categories such as exit scams, investment fraud, deceptive smart contracts, etc. Additionally, a scam may involve multiple scams, such as a combination of an investment scam and a romance scam. With the Bitcoin and cryptocurrency market experiencing a significant upward trend in 2023, scam activities are expected to increase.

But it turns out that the “profits” for these criminals are not high at least in the first half of 2023. As of June, cryptocurrency scammers have made nearly $3.3 billion less in 2023 than in 2022, for a total of just over $1 billion for the year, according to blockchain analytics firm Chainalysis. This decline is attributed to the disappearance of two major investment scams represented by VidiLook.

Meanwhile, certain hacking groups like Lazarus, which has North Korean roots, are no strangers to cryptocurrency scams. The group is estimated to have stolen $3 billion worth of crypto assets over six years and is currently suspected of launching phishing campaigns on Telegram, focusing on the crypto industry. Crypto security expert Slow Mist claimed that members of the organization are currently posing as reputable investment institutions to deceive crypto projects into sending funds to criminals. This particular scam falls into the category of phishing scams and is discussed further below.

Phishing

Phishing uses deception, such as impersonation and the creation of fake websites, to obtain a victim’s funds. A major incident that recently occurred in December 2023 shocked the entire DeFi and Web3 (new generation Internet) industry. A former employee of large hardware wallet maker Ledger has been hit by a phishing attack that allowed attackers to inject malicious code into Ledger’s software. The software is used to control access by third-party applications to crypto assets on hardware wallets, and approximately $600,000 worth of crypto assets have been stolen. After this news came to light, all users of decentralized applications (dapps) were advised to stop interacting until further notice.

Meanwhile, Chainalysis is also warning about another type of crime – approval phishing scams. In this case, the scammer tricks the user into signing a malicious blockchain transaction that approves the scammer’s address for use of specific tokens in the victim’s wallet. Researchers estimate that some victims have lost tens of millions to these scams.

Therefore, this emerging phishing scam is an important reminder to not only double-check the identity of the person or website you interact with on the internet before signing any transaction, but also to verify the address before initiating a transaction.

Pump & dump schemes and rug pulls scams

Cryptocurrency participants should also be wary of manipulation and deceptive tactics, including pump & dump schemes and rug pulls. The former refers to the manipulation of token prices through misleading claims, thereby selling overvalued funds and causing losses to unsuspecting investors. While data for 2023 has yet to be released, Chainalysis estimates that 24% of tokens launched in 2022 saw price drops in the first week, indicating potential pump-and-dump activity.

The getaway strategy is that after collecting funds from investors, the criminal team disappears with all the funds. Hacken estimates that 65% of losses in the cryptocurrency space in the third quarter of 2023 were caused by runaways. Researchers documented 78 incidents that cost investors nearly $50 million. Checking whether a cryptocurrency project has been audited by an independent third party (which may indicate potential risks) can help prevent falling victim to a scam. According to Hacken, of the 78 starting road incidents examined, only 12 reports were reviewed by a third party and received a low rating after the review.

Ransomware

While fraud activity decreased in the first half of 2023, cryptocurrency-related ransomware activity increased. According to Chainaanalysis, ransomware will become the only growing type of cryptocurrency-related crime in 2023. Criminals have extorted at least $449 million through June, a 64% increase from the same period in 2022, with the sharp increase attributed to attackers targeting larger organizations in order to extract higher ransoms. There have also been some more successful smaller-scale ransomware attacks.

Ransomware size of different ransomware in 2023

As the new year approaches, criminals are even more striving to maximize their profits. Data from Immunefi shows that in November 2023 alone, losses in the BTC and crypto markets due to hackers and fraud were approximately $340 million, an increase of 15.4 times from October.

As awareness of cybersecurity threats continues to grow, BTC and cryptocurrency users and related organizations can expect to be better vigilant in 2024 to maintain their own security.

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