Crypto criminals snatched $412m in February

Crypto criminals perpetrated nearly half a billion dollars in theft last month as security remains a pain point within the digital asset industry. 

Web3 protocols and blockchain participants lost approximately $411.7 million throughout February to crypto criminals, according to on-chain analytics provider Quantstamp. The firm’s monthly web3 security report said users suffered losses over smart contract hacks, rug pulls and scams, and wallet key compromises. 

Crypto hackers breaching digital wallet security made the largest haul, stealing $333.2 million in 29 days. One of these cases included an attack on Axie Infinity co-founder Jeff Zirlin. As reported by crypto.news, hackers siphoned 3,248 Ether (ETH) worth $9.5 million at the time from two of Zirlin’s wallets. 

Rug pulls and scams looted around $69.5 million in crypto from users in February. Rug pulls typically occur when bad actors market a project with promises and a seemingly genuine roadmap. After attracting users and deposits, the crypto criminals withdraw liquidity and disappear with the proceeds, leaving supporters with worthless tokens. 

Per Quantstamp, nearly $8.9 million was lost to smart contract hacks by leveraging loopholes and bugs in smart contract codes deployed by decentralized protocols. The attack vectors differ for each project and may range from flash loan hacks to reentrancy bugs that allow hackers to call vulnerable functions repeatedly. 

On-chain security was a boilerplate topic heading into 2024 following billions in hacked crypto last year, as North Korea’s Lazarus hacking group alone stole over $300 million from web3 projects in 2023. Experts believe security improves as developers and startups dedicate additional resources to security solutions and practices. 

Chainalysis also noted a 29% reduction in crypto money laundering as crypto criminals have been kneecapped by sanctions imposed on mixing services.