Cryptocurrency Scams and Hacks Result in $1.2 Billion Loss in 2024
Cryptocurrency enthusiasts and investors have faced a staggering loss of over $1.2 billion in 2024 due to scams and security breaches. As blockchain technology continues to evolve, cybercriminals are becoming increasingly sophisticated in exploiting vulnerabilities, leading to devastating financial losses for users.
The latest report from Kryptocasinos.com reveals some shocking statistics about the state of security in the cryptocurrency space. Ethereum, the most prominent blockchain in the market, remains the primary target for hackers, accounting for over $228 million of the stolen funds. Meanwhile, centralised exchanges (CEXs), which have become essential for trading cryptocurrencies, are also under siege. More than 50% of the stolen funds this year originated from these platforms.
In this post, we’ll dive deeper into the findings of the report, examining how scams and hacks are happening, which platforms are most vulnerable, and what cryptocurrency users need to know to protect their investments.
Ethereum: The Blockchain with the Most Losses in 2024
Ethereum has long been the backbone of the decentralised finance (DeFi) ecosystem, but in 2024, it has unfortunately also become the most targeted blockchain for cyberattacks. The report reveals that over $228 million was lost from Ethereum-based projects due to hacks and scams this year.
So, why are Ethereum and its network of decentralised applications (dApps) so attractive to hackers?
- Popularity: As the second-largest blockchain by market cap, Ethereum has a massive user base and a thriving ecosystem of projects. This makes it an obvious target for attackers looking to capitalise on high-value transactions.
- Smart Contract Vulnerabilities: Many DeFi platforms built on Ethereum rely on complex smart contracts. While these contracts are designed to facilitate trustless transactions, poorly written code can leave room for exploits.
- Phishing and Social Engineering: Ethereum users are often targeted by phishing scams designed to steal private keys or trick users into signing malicious transactions. The prevalence of these types of attacks has contributed significantly to the losses.
In addition to these vulnerabilities, the rise of decentralised exchanges (DEXs) and DeFi protocols built on Ethereum has expanded the attack surface for hackers.
Centralised Exchanges (CEXs): Primary Targets for Hackers
Centralised exchanges (CEXs) have always been a target for cybercriminals, and 2024 is no exception. The report highlights that over 50% of stolen funds came from breaches of centralised platforms, such as BitForex.
What makes CEXs so vulnerable?
- Custodial Nature: When you store your cryptocurrency on a centralised exchange, you’re essentially putting your trust in that exchange’s security measures. However, if the platform is compromised, all your funds are at risk.
- High Liquidity: CEXs handle a massive volume of trades, and the funds they manage are often large enough to attract cybercriminals looking for a quick payday.
- Lack of Transparency: Unlike decentralised exchanges (DEXs), CEXs have centralised control over their operations. This centralisation makes it easier for hackers to find weak points, whether in the exchange’s infrastructure, software, or user authentication processes.
In the case of BitForex, one of the largest scams of 2024, over $56 million was stolen from the platform after a suspicious outflow of funds. The exchange shut down access, blocked users trying to log in, and stopped processing withdrawals—essentially pulling off a rug pull (an exit scam). This is a vivid example of how CEXs are prime targets for hackers looking to exploit trust-based platforms.
The Rise of Scams: Phishing, Access Control Exploits, and Rug Pulls
In addition to large-scale hacks, scams continue to be a major source of financial loss in the cryptocurrency space. Two common methods of fraud in 2024 include:
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Phishing Scams: Phishing attacks, where users are tricked into entering their private information into fake websites or emails, remain one of the most prevalent forms of fraud. These attacks can happen through:
- Fake exchanges
- Impersonation of legitimate cryptocurrency projects
- Social engineering tactics on messaging platforms like Telegram or Discord
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Access Control Exploits: Another common vulnerability is in access control—the systems that handle user logins and permissions. Cybercriminals exploit weak or misconfigured security measures to gain unauthorised access to users’ funds. Once they gain access, attackers can steal large amounts of cryptocurrency, often going undetected for weeks or even months.
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Rug Pulls: A rug pull occurs when developers of a cryptocurrency or DeFi project deliberately abandon it, often taking investors’ funds with them. These types of scams are especially prevalent in new, lesser-known tokens or projects that haven’t been adequately vetted. In 2024, exchanges like BitForex have been associated with rug pulls, leaving investors with nothing to show for their investments.
The Impact of Smaller and Newer Blockchains
While Ethereum and other major blockchains continue to be prime targets, smaller and newer blockchains are also suffering significant losses. The category labelled as ‘Other Blockchains’, which includes emerging platforms like Ronin and Blast, accounted for 9.97% of the total losses in 2024—around $127.25 million.
Why are newer blockchains more vulnerable?
- Less Secure: Many new blockchain platforms have yet to mature and often lack the rigorous security protocols that major players like Ethereum or Bitcoin have had years to develop.
- Smaller Community: Smaller communities often lead to slower identification and response to security threats, making it easier for hackers to operate undetected.
- Experimental Projects: Newer platforms are often experimental, and the code may be less tested, leading to vulnerabilities that hackers can exploit.
How to Protect Your Cryptocurrency from Scams and Hacks
As the cryptocurrency market grows, so do the risks. However, there are steps users can take to protect their assets and reduce the likelihood of falling victim to scams or hacks:
- Use Decentralised Platforms: Whenever possible, opt for decentralised exchanges (DEXs) that don’t hold custody of your funds.
- Enable Two-Factor Authentication (2FA): Always use 2FA for an extra layer of protection when logging into exchanges or cryptocurrency wallets.
- Use Hardware Wallets: Hardware wallets like Ledger or Trezor keep your private keys offline, making them far more secure than online wallets or exchanges.
- Be Wary of Phishing: Always verify the authenticity of emails or links, and never share your private keys or seed phrases with anyone.
- Do Your Research: Before investing in any project, research the team behind it, read the whitepapers, and check for community feedback.
Conclusion: Navigating the Risky Crypto Landscape
The data from Kryptocasinos.com clearly shows that cryptocurrency scams and hacks are a growing threat, with Ethereum and centralised exchanges (CEXs) being major targets. As the blockchain industry matures, securing assets and platforms will become even more critical.
It’s essential for crypto users to stay informed and take proactive measures to protect their investments. By following best practices like using hardware wallets, enabling two-factor authentication, and being cautious of phishing scams, you can help safeguard your crypto holdings in 2024 and beyond.
