A notable vulnerability within the crypto industry lies in its susceptibility to illicit activities, including rug pull schemes and more, which have led to substantial losses, reaching millions and even billions of dollars for users.
In August 2023, a Certik report shows that a total of $45 million was stolen from crypto projects, while about 29% of the stolen funds were associated with the Pepecoin meme project. Next to Pepecoin on the list is Exactly Protocol, at $7.3 million.
Magnate Finance, sfrxETH Permit Phishing, Balancer, Steadefi, Cypher Protocol, Base Scammer, and Fake LayerZero incidents attracted losses of $5.4 million, $2.2 million, $2.2 million, $2.1 million, $1.1 million, $1.1 million, $1.1 million, and $1.1 million, respectively.
Certik is a cryptocurrency firm that specializes in blockchain security and smart contract auditing. They provide services to ensure the safety and reliability of blockchain projects.
All of these attacks in the industry were also segmented according to their unique attributes.
Flash loans
In the Flash Loan category, Certik noted that the top five incidents were carried out on Zunami Protocol, Balancer, Unverified Contract, Earning Farm, and Star Token collectively. The total loss here was about $6 million.
A flash loan is a type of decentralized finance (DeFi) transaction that lets users borrow cryptocurrency without collateral. These loans must be borrowed and repaid within a single blockchain block and are often used for quick arbitrage or trading strategies in the cryptocurrency market.
Exit scams
Pepecoin led the category, followed by Magnate Finance, Base Scammer, Fake LayerZero, and Apache NFT SalesRoom. These top five companies saw a loss of about $22 million in total.
An exit scam in cryptocurrency is when fraudsters raise funds from investors and then abruptly vanish or shut down their projects, leaving investors with losses.
This can happen in ICOs, crypto exchanges, or investment schemes, causing financial harm and trust issues in the crypto community.
On August 24, it was recorded that a group of Pepecoin developers modified the signature requirement for transferring tokens from their multi-sig wallet.
They adjusted the figure from five out of eight to just two out of eight. After this, they transferred $16 million worth of PEPE tokens to cryptocurrency exchanges, indicating an intention to sell these tokens.
Exploits
Exactly Protocol, sfrxETH Permit Phishing, Steadefi, Cypher Protocol, and RocketSwap got the top five spots for the exploits in August 2023. These five had a loss of over $12 million.
Exploits in cryptocurrency are vulnerabilities or weaknesses in blockchain protocols, smart contracts, or platforms that malicious actors use to gain unauthorized access, steal assets, or manipulate systems.
They include smart contract exploits, protocol vulnerabilities, exchange hacks, and DeFi-related attacks. These activities have caused the loss of billions of dollars, with 2022 having a total of $3.1 billion stolen.
Finally, while Certik recorded the $45 million loss for August, it noted that $997 million has been recorded so far as the loss for 2023.
