A recent report by Chainplay revealed that 83% of crypto users and investors have been scammed or hacked before highlighting the menace of bad actors in the crypto industry.
Chainplay, in collaboration with Storible, investigated 444 Crypto projects and surveyed 2,101 investors to arrive at their verdict, which they shared in a Chainplay blog post. The Survey had four key findings, making the new data’s meat.
- 83% of crypto investors have been scammed or hacked at least once.
- On average, crypto investors lost $2,622 from scams and hacks.
- Crypto exchange users lost over $27B due to hacks.
- 64% of hacks targeted DEXs, but losses on CEXs were 27 times higher.
The Report Indepth
The report went in-depth into the menace of scams in the crypto industry, revealing their various shapes and forms. It highlighted the three top scams in the industry and how bad actors use them to swindle people out of their funds. According to the March Report, the top three scams in the industry are as follows.
- Social media impersonation (34.02%)
- Exchange/platform hacks (21.30%)
- Phishing attacks (18.64%)
Social Media Impersonation and Phishing
Social media impersonation and Phishing attacks go hand in hand. The Chainplay report analyzed the top 300 crypto projects by market capitalization on Coingecko. It pieced together their official social media handles and websites and generated 200 potential phishing websites and 200 potential fake Twitter accounts, verifying how many were active.
The little experiment revealed that an average of eight phishing links target each crypto project and face seven fake Twitter accounts. The phishing links embedded in social media accounts is a deadly booby trap for unsuspecting crypto users and investors.
Social media impersonation and Phishing attacks make up 52.66% of Scams and exploits in the industry.
Exchange Hacks
According to the report, the last primary type of scam is a hack and exploit on a crypto exchange. Last month, $1.5 billion was removed from the Bybit exchange following a blind signing attack. This is the largest exploit in the history of organized finance. The Bybit hack follows a $235 million hack on WazirX last year in India.
The Chainplay report analyzed hacks on decentralized and centralized exchanges, given their percentages, and combined the frequency of exploits in both exchanges.
Decentralized exchanges (DEXs) may attract more hack attempts (64%), yet centralized exchanges (CEXs) suffer significantly higher financial losses, 27 times greater, according to the report.
The total losses from exchange hacks totaled $29 billion. CEX users lost over $26.4 billion, while DEX users lost over $800 million. Exchanges lost $1.6 billion, bringing the total loss to $29 billion.
The Chainplay report revealed the depth of the industry’s challenge in protecting user funds and mitigating the threat of bad actors. The crypto industry remains low-trust, with stories of hacks and exploits on end users and exchanges.
Addressing this monster will go a long way toward hastening global crypto adoption and ushering in the “ lightning vision “ pictured by Satoshi Nakamoto, the industry’s founding father.
