PeckShield reports a decline in crypto theft and a surge in recovery efforts, with $674.9M reclaimed.
In a remarkable turn of events for the cryptocurrency industry, 2023 has seen a significant decrease in the amount of money lost to hacks and scams, alongside an impressive increase in the recovery of stolen funds. According to blockchain security firm PeckShield, the total losses due to crypto-related criminal activities dropped by 27.78% compared to the previous year, amounting to $2.61 billion.
One of the most notable achievements in the fight against crypto crime this year has been the successful recovery of stolen cryptocurrency. PeckShield's report indicates that out of the $2.61 billion lost, a substantial sum of $674.9 million was reclaimed. This figure is a significant leap from the $133 million recovered in 2022, showcasing the growing effectiveness of recovery strategies.
The increased recovery rate can be attributed to a combination of factors. Active negotiations with hackers, the implementation of bug bounty programs that incentivize the reporting of security loopholes, and strengthened collaboration between crypto exchanges, Tether, and law enforcement agencies have all played a role in reclaiming stolen assets.
Despite the overall reduction in losses, decentralized finance (DeFi) protocols continue to be a prime target for cybercriminals. The report from PeckShield highlights that 67% of the total losses in 2023 occurred within the DeFi space, with the remaining 33% affecting centralized financial platforms. This trend underscores the need for heightened security measures within the DeFi ecosystem.
Among the various types of attacks, flash loan assaults accounted for 40% of the hacks. These attacks exploit vulnerabilities in DeFi protocols to borrow large amounts of cryptocurrency without collateral, manipulate market prices, and then repay the loan within a single transaction. Additionally, there has been a shift in the types of cryptocurrencies targeted by illicit activities, with stablecoins—cryptocurrencies pegged to stable assets like the US dollar—seeing an increase in transactions linked to hacks and scams in both 2022 and 2023.