Web3 hacks declined in May despite a $19.7m loss

May witnessed a notable decrease in web3 hacks and scams. The total losses reached $19.69 million, marking a significant 79% decline compared to April.

According to data released by blockchain analytics and security platform Beosin EagleEye, a significant decline in rug pulls and scams was recorded in the web3 industry in May. 

Within the decentralized finance (DeFi) sector, several notable hacks occurred in May, demonstrating vulnerabilities that require attention. These incidents included the attack on Level Finance, Never Fall, DEI, BFT, SNK, Swap-Lp, Tornado Cash, CS token, and BSC’s on-chain LCT project.

Among these, the most actual heist was perpetrated against Jimbo on the Arbitrum chain, resulting in a loss of approximately $7.5 million.

Hardware wallet-related security incidents have gained prominence, posing a growing threat to user funds. Notably, imKey, a leading hardware wallet manufacturer, discovered unofficial stores selling “activated” imKey wallets, which increased the risk of fraud through social engineering attacks. 

Additionally, security experts identified vulnerabilities in the Trezor T hardware wallet, emphasizing the importance of physical security for wallet devices.

The web3 space witnessed several rug pulls and crypto scams during May. Investors in projects such as XIRTAM, WSB Coin, Swaprum, Fintoch, and BlockGPT were all affected, resulting in losses ranging from hundreds of thousands to millions of dollars. Particularly concerning was the case of Inferno Drainer, a multi-chain scam service provider that stole nearly $5.9 million from almost 4,888 victims, the report notes.

Beyond individual project attacks, crypto crimes and fraudulent schemes also plagued the industry. 

The US Department of Justice (DoJ) uncovered an investment fraud scheme called CoinDeal that defrauded over 10,000 victims of more than $45 million. Additionally, authorities seized $112 million worth of cryptocurrency linked to a cat-fishing scam. These incidents underscore the persistent threat malicious actors pose in the crypto space.

Proactive measures needed

Given the rapidly evolving nature of blockchain security threats, industry experts recommend proactive measures to safeguard user assets. Users should increase their anti-fraud awareness and thoroughly research project backgrounds before investing in them.

Furthermore, the research reveals that more than half of the projects targeted in May lacked proper auditing, highlighting the importance of engaging professional audit companies before project launches.

While web3 hacks and scams reduced in May, resulting in a significant decline in financial losses compared to the previous month, the persistence of fraudulent activities necessitates constant vigilance within the crypto community. 

The industry must remain committed to enhancing security measures, promoting comprehensive audits, and educating users to fortify the web3 ecosystem against malicious actors. 

Despite these ugly incidents, it’s worth noting that crypto adoption has continued to rise, indicating a growing acceptance of digital assets as legitimate investments and transactional tools.  

However, these scams and rug-pulls remind investors to be diligent in decision-making. These unfortunate incidents emphasize the importance of staying informed and seeking reliable information from trustworthy sources when investing in these nascent crypto assets.