Analysis of Crypto Losses in February
The cryptocurrency market experienced significant losses in February, totaling $1.53 billion, according to a report by Certik. This represents a substantial increase of nearly 1,500% from the $98 million in losses reported in January. The three largest exploits were attributed to Bybit, Infini, and zkLend, with Bybit’s hack being the largest crypto hack ever, resulting in a loss of $1.4 billion.
Bybit Hack
The Bybit hack, which occurred on February 21, was attributed to North Korea’s Lazarus Group. The stolen funds were laundered using crypto mixers, and as of the latest update, almost all of the stolen funds have been laundered. This hack surpasses the $650 million Ronin bridge hack in March 2022, which was also linked to Lazarus.
Infini and zkLend Exploits
The second-largest loss stemmed from the February 24 hack of stablecoin neobank Infini, resulting in a loss of $49.5 million. The exploit was attributed to a developer who retained admin rights after helping set up the smart contract. Infini has offered a 20% bounty for the return of the stolen assets, but the funds are still in the hacker’s possession.
The February 12 exploit of zkLend resulted in a loss of $9.5 million worth of Ethereum (ETH). zkLend has offered a bounty to the hacker, asking for the return of 90% of the stolen funds, with the hacker allowed to keep 10%. A recovery portal for affected users has been opened, but the funds are still in the hacker’s possession.
Other Losses
In addition to the losses due to hacks, Certik reported that wallet compromises were the top category for losses, followed by code vulnerabilities, which led to $20 million in losses. Phishing attacks resulted in $1.8 million in stolen funds.
Predictions and Insights
The significant increase in crypto losses in February is a concern for the cryptocurrency market. The fact that the largest hack was attributed to a nation-state actor, North Korea’s Lazarus Group, highlights the need for increased security measures to prevent such exploits.
The use of crypto mixers to launder stolen funds also raises concerns about the anonymity of cryptocurrency transactions. Regulatory bodies may need to revisit their policies on crypto mixers to prevent their use in illicit activities.
The offers of bounties by Infini and zkLend to the hackers may set a precedent for future hacks, where hackers may demand bounties in exchange for returning stolen funds. This could lead to a new era of “hack-and-negotiate” attacks, where hackers target vulnerable systems and then negotiate with the affected parties for a bounty.
The increase in losses due to wallet compromises and code vulnerabilities highlights the need for improved security measures, such as multi-factor authentication and regular security audits. The cryptocurrency market must take proactive steps to prevent such exploits and protect users’ funds.
Key Statistics
- Total crypto losses in February: $1.53 billion
- Increase in losses from January: nearly 1,500%
- Largest hack: Bybit, resulting in a loss of $1.4 billion
- Second-largest loss: Infini, resulting in a loss of $49.5 million
- Third-largest loss: zkLend, resulting in a loss of $9.5 million
- Losses due to wallet compromises: top category
- Losses due to code vulnerabilities: $20 million
- Losses due to phishing attacks: $1.8 million
Conclusion
The significant increase in crypto losses in February is a concern for the cryptocurrency market. The use of crypto mixers to launder stolen funds and the offers of bounties to hackers may set a precedent for future hacks. The market must take proactive steps to prevent such exploits and protect users’ funds. Regulatory bodies must also revisit their policies on crypto mixers and anonymity to prevent their use in illicit activities.
