Last updated on July 28th, 2024 at 03:49 pm
We’re only halfway through 2024 and have already witnessed some of the largest and most damaging crypto hacks in recent memory. These incidents seem to surpass expectations each time, showing how unsafe the crypto world can be. These hacks severely impact platforms, investors, and regulatory frameworks designed to maintain stability.
Understanding the details and consequences of these crypto hacks is crucial not only for protecting digital assets but also for assessing how they impact the market and regulatory policies. This article discusses the major crypto hacks so far in 2024, how the hackers pulled them off, what weaknesses they exploited, and how the hacks impacted the affected platforms and their users.
Six of the Most Notorious Crypto Hacks in 2024
1. Orbit Chain ($80 Million)
Just hours into the new year, on January 2, 2024, South Korea’s Orbit Chain was hacked, and stripped of over $80 million worth of different cryptocurrencies.
The attack targeted multisig signers, compromising their credentials and draining $30 million in USDT, $10 million in USDC, $10 million in DAI, 231 wrapped Bitcoin (WBTC) worth $10 million, and 9,500 ETH worth $21.5 million from the chain.
The hackers used mixers to mask the movement of the stolen assets, making tracing and recovery challenging. Till date, the case remains unresolved, with no funds recovered, and the perpetrators are still at large despite the protocol’s efforts.
The Orbit Chain team has been working with international law enforcement and security experts, including Theori, to track and recover stolen assets. They’ve also reached out to cryptocurrency exchanges to freeze any related funds and improve security measures for their wallets and systems. Additionally, Ozys, the parent company, has launched educational campaigns to teach users about account security and phishing scams.
2. CoinsPaid ($7.5 Million)
On January 8, 2024, Estonia-based digital asset processor CoinsPaid suffered its second major hack in six months, losing $7.5 million. The breach involved unauthorized withdrawals of various cryptocurrencies, including $6.1 million worth of USDT, ETH, and USDC; its native token, CPD, which was exchanged for $368,000 ETH; and over $1 million worth of BNB.
The identity of the hacker and how the attack was conducted have not been officially confirmed. However, there is strong speculation that it may be linked to the agents behind the first attack. CoinsPaid had attributed the first attack, which happened in July 2023 to the North Korean Lazarus Group. They claimed the Group tricked an employee into giving a fake job interview to gain access to its infrastructure and download the code that gave them access.
After the attack, CoinsPaid noted that it had improved its security by adding advanced encryption and multifactor authentication for all transactions. They also collaborated with top crypto payment providers to create new data security strategies and implemented real-time monitoring and anomaly detection to prevent future attacks.
3. PlayDapp ($290 Million)
Crypto gaming and NFT platform PlayDapp got hit twice midway through February, losing over $290 million. The hackers exploited a vulnerability in the protocol’s smart contract and minted 1.79 billion of its native token, PLA.
In the wake of the hack, the protocol paused the affected smart contract to prevent further unauthorized transactions and mitigate losses. It then attempted to negotiate, offering a $1 million reward. Otherwise, the reward would be offered to anyone who helped capture him, but negotiations failed when the hackers refused to cooperate.
The PlayDapp team took several actions in response to the security breach, starting an internal investigation, monitoring token flow, and notifying exchanges. The team audited smart contracts, patched vulnerabilities, and implemented enhanced security measures, including advanced encryption and multi-factor authentication. An incident response team was established, and educational campaigns were launched to promote user security and build trust.
4. Prism finance ($10 Million)
In March 2024, Prisma Finance, a DeFi protocol, lost approximately $10 million due to an input validation failure in their smart contracts. The vulnerability allowed the attackers to manipulate the protocol’s processes and steal the assets.
Thankfully, the protocol team acted quickly and halted operations to prevent further losses. Following their investigations into the cause of the breach, the team says they now thoroughly check and verify user data, carefully consider external inputs, evaluate contracts for immutability or upgradeability, and conduct rigorous audits and testing to address vulnerabilities before deployment.
5. Pump.fun ($1.9 Million)
May 2024 saw Pump.fun, a Solana-based memecoin launchpad, lose $1.9 million worth of SOL. A former employee gained unauthorized access to admin privileges and used flash loans to manipulate the platform’s bonding curve contracts to steal funds from its liquidity coffers. The hacker, known as “Stacc” on social media, admitted to the breach and criticized Pump.fun’s security practices, highlighting weaknesses in their protocols.
In response, Pump.fun suspended all trading activities and updated its smart contracts to prevent any more unauthorized transactions and potential losses. The protocol also introduced a temporary 0% trading fee policy for seven days following the breach to aid liquidity restoration efforts and reassure users.
6. Uwu Lend ($19.5 Million)
On June 10, 2024, UwU Lend, a lending and liquidity protocol, suffered a major breach and lost $19.5 million. The attackers exploited the protocol’s vulnerabilities in its price oracle using flash loan tactics.
UwU Lend’s response focused on enhancing its security measures, conducting thorough audits of smart contracts and protocols, improving how it monitors transaction activities, and tightening access controls to reduce future risks and protect its users’ funds.
Ironically, the platform suffered another attack three days after the first, losing $3.5 Million this time in a similar fashion to the previous attack, even after threats and negotiation offers.
Understanding the Implications of Crypto Hacks in 2024
The obvious truth is that each successful hack erodes user trust in DeFi platforms, making it harder for the sector to attract and retain users. Building robust security measures and transparently communicating efforts to protect user assets are vital for restoring confidence. Platforms that are proactively implementing and demonstrating strong security measures can differentiate themselves in the market. Users are more likely to trust platforms that commit to safeguarding their assets.
Need for Updated Security Protocols
As cyber threats continue to evolve, DeFi platforms must stay ahead by updating their security measures regularly. For instance, most of these attacks preyed on existing and known issues: smart contract vulnerabilities like input validation failure, price oracle manipulation, and unauthorized access to essential platform data.
The rise of AI-powered tools has heightened these risks. A recent report by the research arm of crypto exchange Bitget projected that AI-powered deep-fake crypto scams could lead to losses of up to $70 billion in 2024. The increasing complexity of attacks underscores the need for equally advanced defensive measures.
The solution would most likely come from AI, too. DeFi platforms should consider implementing AI-driven security systems for real-time threat detection and prevention.Also, there has to be a solid collaboration between DeFi platforms, security firms, and law enforcement. Sharing threat intelligence and best practices across the ecosystem can help create a more resilient defence against evolving cyber threats.
Regulatory Responses and Implications for Future Regulations
High-profile hacks, such as those that affected Orbit Chain and Uwu Lend, have intensified regulatory scrutiny of the sector. Regulators may impose stricter guidelines for security protocols, digital asset storage, and enhanced reporting requirements.
Given the global reach of these hacks, regulatory responses may involve coordinated international efforts to harmonize security standards and foster cross-border cooperation in combating cyber threats. This is good, but it also has consequences—more rules and burdens to bear.
For instance, there are already discussions on implementing insurance schemes or compensation mechanisms to gain momentum and protect users from losses due to platform breaches. This could lead regulators to explore frameworks for mandatory insurance coverage or industry-funded compensation pools. These regulatory shifts could significantly reshape the operational landscape for DeFi platforms in the coming years.
Final Thoughts
Cybersecurity in the crypto space remains a critical concern. The lessons learned from these hacks underscore the urgent need for enhanced security measures and more sophisticated risk management strategies.
Each hack shows how vulnerable crypto can be, which is why we urgently need better security and smarter ways to manage risks. These breaches don’t just cause big money losses and disrupt how platforms work—they also make users and investors less trusting.
Looking forward to the rest of 2024, cybersecurity in crypto will be a big deal. Governments and regulators are likely to make rules stricter to make platforms safer and protect people who invest. Working together between companies and regulators will be key to setting up strong rules that can handle cyber threats and help the crypto market grow in a safe way.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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