Crypto users and projects need to remain vigilant as they navigate the upcoming bull market, as there are various risks to watch out for, including untrustworthy exchanges, insecure DeFi protocols, and evolving phishing scams. In January alone, hackers launched 30 attacks and managed to steal more than $182.5 million, which is a 771% increase compared to the same period last year. February was even worse, with over $380 million stolen, including $290 million from PlayDapp, $26 million from FixedFloat, and $9.7 million from Axie Infinity co-founder Jeff Zirlin.
According to Eric Jardine, the lead of cybercrime research at Chainalysis, education is crucial in keeping crypto safe. He emphasized the importance of awareness and urged users to research platforms and DeFi protocols before engaging with them. Jardine also highlighted the transparency of crypto protocols, which, while beneficial for code auditing, can also expose vulnerabilities to bad actors.
Phishing scams have been particularly prevalent, with over 324,000 crypto users falling victim to them in 2023, resulting in losses of approximately $295 million. Scam Sniffer, an anti-scam platform, revealed that social media platforms are the most common source of scam links, often found in advertisements. Phishing attacks disguised as Ethereum staking and token airdrops have become increasingly common and effective.
To protect themselves, users should always verify website URLs from multiple sources and understand the nature of a contract before signing a transaction. Additionally, drainer-as-a-service tools, such as those used in fake airdrops, have become convenient phishing tools that attackers advertise on platforms like Google and X.
Choosing a secure centralized exchange (CEX) is crucial for new crypto users. Beosin security researcher Pan Tao advised users to ensure that the chosen exchange is licensed or regularly publishes proof of reserves. It should also have no withdrawal issues or high withdrawal fees, and provide timely customer support with clear responses.
When it comes to DeFi protocols, Jardine emphasized the need for comprehensive security measures both on and off the blockchain. On-chain vulnerabilities, particularly in smart contracts, were responsible for the majority of DeFi hacking activity in 2023. However, compromised private keys became a significant factor in the second half of the year. Jardine suggested that projects implement systems to monitor on-chain activity for potential vulnerabilities. Some firms offer products that can alert and respond to cyberattacks, enhancing security and protecting at-risk customers.
Despite the risks, Jardine noted that DeFi protocol security practices have improved, resulting in a 64% decrease in losses from protocol hacks in 2023, amounting to $1.1 billion.
In a volatile market, protecting one’s crypto assets is crucial. Bitcoin OGs and experts recommend various strategies to safeguard investments.