A report by Immunefi, a bug bounty and security services platform, reveals that the Web3 space suffered a huge loss of over $685 million due to cyberattacks in the third quarter of 2023. This represents a 59.9% increase from the previous quarter, indicating a growing threat to the blockchain and cryptocurrency sector.
Hacks and Frauds Dominate the Cybercrime Landscape
According to the report, the majority of the losses were caused by hacks, which accounted for over $662 million across 49 separate incidents. The remaining balance of over $22 million was attributed to fraudulent investment schemes captured across 27 specific incidents.
The report also identified the most vulnerable protocols and chains that were targeted by the malicious actors. Mixin Network and Multichain were among the hardest hit, with a combined loss of $326 million due to hacks. This amounted to 47.5% of all losses recorded in Q3.
Ethereum-based projects were also the prime targets of these bad actors, as a record number of 35 Web3 protocols were hit on the older blockchain protocol. Binance-owned BNB Chain came a close second on the list, with 25 protocols seeing their funds drained.
Lazarus Group Leads the Pack of Cybercriminals
The report also revealed the main perpetrators behind these cyberattacks, naming the North Korean-sponsored Lazarus Group as the top hacking team. Immunefi stated that the infamous hacking team carted away over $208 million, indicating a 30% value from the total losses suffered in Q3.
Lazarus Group executed its heist on CoinEx, Stake, Alphapo, and CoinsPaid. CoinEx, a crypto exchange, lost about $70 million in assorted asset types due to a hack of its hot wallets. The data breach was reportedly caused by compromised private keys suspected to be stolen by Lazarus Group.
The Need for Better Security and Regulation
The report by Immunefi highlights the urgent need for better security and regulation in the Web3 space, as cyberattacks pose a serious risk to the growth and adoption of blockchain and cryptocurrency technologies. The report also suggests some possible solutions, such as creating ethical standards, ensuring transparency and accountability, and fostering public awareness and education.
Immunefi also urges the government and the industry to work together to ensure the safety and benefits of Web3 technologies. The platform also offers its services to help Web3 protocols secure their systems and prevent future attacks.