Good day everyone,
I hope you are all well and had an excellent week, welcome to CryptoGod-1’s blog on all things crypto. A recent study by the blockchain security firm Hacken has shown an increase every quarter in rug pulls throughout the crypto community.
RugPulls/Hacks Increase
Digital asset scams have been on the rise throughout 2023, with the quarter-to-quarter increase in the levels of hacks and money drained from crypto firms leading to wider calls for stricter regulations. A report by blockchain security firm Hacken has shown the impact of digital asset scams, with a total of 117 hacks reported in the last three months with $720 million stolen in the entire industry in Q3 of 2023. During Q2 a total of 131 hacks and $327 million were stolen.
Hacken went on to note that a significant share of losses can be hinged on access control (65%), which according to Hacken, is due to issues such as human factor as much as coding errors.
“In Q3, the crypto landscape witnessed diverse security breaches. The lion’s share of the losses, with a significant 65%, came from Access Control attacks. Smaller yet noteworthy segments – Rug pull and Reentracny + Flash Loans made up over 20%.”
Roughly eight incidents of access control theft occurred, leading to $449 million in losses. The biggest hack during Q3 of 2023 was the Multichain bridge hack, which saw $231 million stolen. This attracted wider concerns within the community after its two previous incidents. The Viper Compiler incident was caused by a bug and lead to approximately $70 million in losses from multiple projects. In the end 90% of stolen funds were recovered.
The most frequent scam incidents were rug pulls, mainly due to their ease of creation and execution. They are a type of exiting scam perpetuated by the team on most occasions rather than an external hacker. The developers of the created scam coin often build traction for the project before withdrawing liquidity after a pump. The scheme is described by analysts as easy to spot and prevent.
A preventative measure for scams like rug pulls is to research the token’s founders and information, and if possible check if the token audit is properly documented by a third-party auditor. Crypto users usually ignore key indicators like auditors prior to investing in certain projects, which can put them at risk. It should be noted that even if an audit is presented, there is still the risk of a rug pull. Therefore it is also important to check on the reputation of the firm behind the audit.
“The project can undergo an audit and have an audit report, but with a poor score. Yet, users overlook this and consider the mere fact that the project was audited as sufficient.”
Hacken managed to examine 78 rug pulls and of the total number they discovered only 112 had participated in periodic audits. The firm proposed a multi-audit approach to block scammers that may conceal intentions at first as smart contract vulnerabilities remain prevalent in the industry.
Have a great day,
Peace. CryptoGod-1.
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