2023 was a year of significant challenges and learning. The crypto space witnessed over 600 major hacks, leading to an estimated loss of around $2.61 billion. Despite the staggering figure, it marked a decrease of 27.78% from the previous year, indicating the relentless efforts towards enhancing security measures in the crypto world.

The year saw a recovery of approximately $674.9 million, but the losses were still substantial. Excluding unauthorized withdrawals from Multichain, the hacks alone accounted for a loss of $1.51 billion. In addition, scams continued to plague the crypto space, contributing to $1.1 billion in losses. Decentralized Finance (DeFi) protocols, the backbone of the crypto world, remained the prime targets, accounting for 67% of the total stolen value.

Major Hacks of 2023

Mixin Network Hack (September)

Mixin Network, a Hong Kong-based cryptocurrency project, experienced the most significant crypto theft of the year, totaling $200 million. The attack occurred on September 23, ending operations abruptly as hackers exploited vulnerabilities in the cloud service provider’s database. Analysts suspect the compromised database may have contained private keys, unlocking users’ crypto holdings.

Euler Finance Hack (March)

Euler Finance, a decentralized finance (DeFi) lending protocol, faced a significant exploit in March 2023, resulting in the disappearance of $197 million in crypto assets. Using a flash loan, the hacker manipulated exchange rates between Euler-issued stablecoins, triggering liquidations of borrower positions and siphoning funds from the protocol. In an unexpected turn, the attacker returned almost all the stolen funds, termed a “white hat” move, providing relief for the victims.

Multichain Hack (July)

Multichain, a cross-chain bridge, fell victim to a reported $125 million crypto exploit in July. The exact cause remains unclear, but security firm Halborn suggests the hack may be linked to compromised private keys in the bridge’s smart contracts. Concerns arose when Multichain’s CEO disappeared before the hack, and it was revealed that he had exclusive control over the protocol’s funds, contradicting earlier decentralization claims.

Poloniex Hack (November)

Poloniex, a centralized exchange, suffered a $120 million theft in November 2023 attributed to suspected North Korean Lazarus Group hackers gaining access to private keys. The Poloniex team subsequently turned off the wallet after discovering the suspicious outflows. According to the blockchain security firm CertiK, the incident was likely a “private key compromise.” Following Poloniex’s restart, Sun promised any affected Poloniex users they would be fully compensated for the hot wallet losses.

Atomic Wallet (June)

Atomic Wallet, a crypto wallet app, had over $100 million of assets stolen in June 2023. The primary cause remains unclear, but suspicions of code vulnerabilities flagged by security analysts a year prior linger. On-chain analytics firm Elliptic attributed the attack to the North Korean hacking association Lazarus Group. Victims in Russia filed a class action against Atomic, alleging failure to protect user assets.

Hacks By type

Private Key Compromise:

• Incidents: 47
• Losses: $880.9 million

Code Vulnerability:

• Incidents: 197
• Losses: $291 million

Exit Scams:

• Incidents: 55
• Losses: $207.8 million

Phishing:

• Incidents: 306
• Losses: $152.7 million

Other Hacks:

• Categories: Oracle manipulation, flash loan attacks, and others
• Incidents: 146
• Losses: $308.5 million

Hacks by Month

January

• Incidents: 56
• Losses: $33.7 million

February

• Incidents: 71
• Losses: $51.8 million

March

• Incidents: 78
• Losses: $240.5 million

April

• Incidents: 75
• Losses: $103.8 million

May

• Incidents: 62
• Losses: $74.5 million

June

• Incidents: 75
• Losses: $135.9 million

July

• Incidents: 79
• Losses: $308.2 million

August

• Incidents: 65
• Losses: $46.3 million

September

• Incidents: 39
• Losses: $332.1 million

October

• Incidents: 41
• Losses: $33.3 million

November

• Incidents: 45
• Losses: $365.3 million

December

• Incidents: 65
• Losses: $116.5 million

Looses by Blockchain 

Ethereum, the largest blockchain in terms of active users and value locked, encountered substantial setbacks, witnessing approximately $686.9 million erased in an estimated 224 incidents. This notable figure underscores Ethereum’s attractiveness to malicious actors, attributed to its extensive ecosystem and involvement in high-profile projects. 

BNB Chain also faced considerable losses, totaling $134.6 million across 387 incidents. The attractiveness of BNB Chain as a target suggests that malicious actors are actively seeking vulnerabilities in various blockchain networks. 

Additionally, losses on Multiple chains, and centralized platforms, including exchanges and trading platforms, amounted to approximately $779.6 million. The largest among these incidents was the November attack on Poloniex, resulting in a substantial loss of $122 million, underscoring the vulnerability of centralized platforms to significant financial breaches.

North Korea-Linked Crypto Hacks in 2023

In 2023, North Korea-linked hacking activities in the cryptocurrency space witnessed a surge, marked by a record-high number of 20 hacks. However, despite the increased frequency, the total stolen amount decreased from approximately $1.7 billion in 2022 to slightly over $1.0 billion in 2023. Prominent cyber-espionage groups like Kimsuky and Lazarus Group employed diverse malicious tactics to exploit vulnerabilities across crypto platforms. The year 2023 particularly saw a decline in the targeting of decentralized finance (DeFi) protocols by North Korean hackers, aligning with an overall reduction in DeFi-related hacking incidents.

Specifically, North Korea-linked hackers in 2023 targeted various sectors within the cryptocurrency space, with estimated thefts of $428.8 million from DeFi platforms, $150.0 million from centralized services, $330.9 million from exchanges, and $127.0 million from wallet providers. While the total stolen amount decreased, the increased diversification in targeted sectors suggests a strategic shift in the hacking focus of North Korean cyber-espionage groups. This trend emphasizes the adaptability of these threat actors as they explore different avenues within the cryptocurrency ecosystem to maximize their illicit gains.

Future Outlook

In 2023, despite a decrease in the total stolen from crypto platforms, there was an evident rise in the sophistication and diversification of crypto hacking methods. Cybercriminals showcased heightened capabilities, prompting crypto platforms to enhance security measures and respond promptly to exploits. Improved collaboration between platforms and law enforcement facilitated the quick identification of frozen funds and initiated seizure procedures, fostering optimism for a continued decline in stolen funds.

The events of 2023 emphasize the immediate need for a collective reassessment of security protocols and strategic measures to strengthen the resilience of crypto ecosystems against evolving cyber risks. Looking ahead to 2024, the crypto landscape anticipates significant advancements in security, regulatory adaptations, and technological innovations. Efforts will include user education, collaborative initiatives, and advanced defense strategies to effectively counter cyber threats, fostering greater trust within the dynamic and rapidly evolving crypto sphere.

Igor Bershadsky, Director of Partnerships at Hacken, notes that while technological advancements may enhance crypto bridge defenses, access control breaches remain a lucrative target, particularly for centralized services with substantial asset pools. He emphasizes the rising risk of rug pull incidents due to decreasing costs and ease of execution, with FOMO periods remaining an attractive exploit. Additionally, Bershadsky warns of the emerging threat of profitable Front-End attacks on dApps, driven by the neglect of website penetration testing by many services.