The world of cryptocurrencies continues to grow; however, with this growth also comes the increasing threat of hacks, frauds, and other malicious activities. The month of August presented an intriguing shift in the pattern of security incidents…
August’s Security Breakdown: A Decline in Losses
August witnessed a total loss of $15.8 million in cryptocurrencies due to hacks or exploits. According to a report released on August 31 by the blockchain security firm, Immunfi, a combined total of $23.4 million in cryptocurrencies were lost owing to a mixture of hacks and frauds. What stands out is the significant drop in these numbers from July, which saw a staggering $320.5 million disappear from users’ wallets.
It’s vital to highlight that these security breaches exclusively targeted decentralized finance (DeFi) protocols. Astonishingly, no centralized finance entities reported any security incidents in the same timeframe.
Diving deeper into the 21 security incidents reported, Ethereum took the brunt with five incidents, while BNB Chain followed closely with four. It is noteworthy to mention that Base, Coinbase’s highly-anticipated layer-2 solution, which was introduced to the market on Aug. 9, encountered four security breaches shortly after its inauguration.
Spotlight on Major Incidents and Trends
Among the major security breaches, the Exactly Protocol hack on Aug. 18 took center stage. A nefarious deposit contract led to the theft of a colossal 4,323.6 Ether (ETH), equivalent to $7.2 million, from users’ deposits.
However, the events on Aug. 25 provided a stark reminder of the constant vigilance required in the DeFi space. Magnate Finance, a borrowing and lending protocol operating on Base, was allegedly involved in a $6.5 million exit scam. This allegation was fortified when a prominent DeFi investigator, zachXBT, disclosed a link between the Magnate Finance deployer address and the exit scam. The aftermath of this incident was a swift clearance of all assets from the protocol’s smart contract. The protocol’s digital footprint, including its website and social media handles, went dark shortly after.
Zooming out, the cumulative loss due to hacks and fraudulent activities in the current year has reached a staggering $1.25 billion, as per Immunefi’s data. Past incidents, like the malicious flash loan attack on DeFi protocol Euler Finance in March that drained $195 million, serve as a testament to the looming threats. However, in a turn of events, the Euler hacker restored over 90% of the stolen assets following threats of legal action from the developers.