The cryptocurrency landscape is at a decisive moment. Illicit activities like fraud and counterfeiting are increasing, with experts predicting their value will exceed $51 billion in 2024. This alarming increase not only proves a demand for more security measures but greater security awareness in the digital asset space.
So far in 2024, nefarious conduct within the crypto space has racked up a jaw-dropping $40.9 billion. This sobering number serves to underscore the challenges still facing the industry. With the pace of the year continuing, illicit cryptocurrencies are on track to far surpass the amount observed in 2023. This spike is indicative of an upward trend, with annual estimates of illicit action rising by more than 25% on average each year since 2020.
In 2024, researchers pinpointed a new vulnerability as the biggest threat—compromised private keys. Unfortunately, this problem has become the number one attack vector for cyber threats. This approach by itself is responsible for 43.8% of all funds stolen worldwide. The vulnerability of private keys highlights the importance of secure storage practices and robust security protocols for cryptocurrency users and exchanges alike.
That’s a big deal considering that the cryptocurrency sector was just hit with a massive cyber attack against Bybit in February 2024. The consequences of this attack totaled nearly $1.5 billion in stolen Ether (ETH). Yet it is notable for being the biggest digital theft ever from cryptocurrencies. The Bybit hack should serve as a cautionary tale for the catastrophic potential of major exploits. While unfortunate, it further highlights the immediate need for cryptocurrency exchanges to greatly improve their security practices.
DeFi has proven time and again to be the leading venue for bad actors. In the latest quarter (Q1 2024), hackers made off with $353 million of assets on DeFi platforms. This shocking trend underscores the deepening security challenges unique to decentralized finance. Cybercriminals are drawn to the often unaudited, complex nature of DeFi protocols as targets to exploit vulnerabilities.
Scams and the laundering of stolen funds are spread across multiple assets, making it difficult to trace and recover illicitly obtained cryptocurrencies. Cybercriminals often use various cryptocurrencies to obscure the source of their money. The use of this tactic complicates and even curb stomps law enforcement and regulatory agencies’ collective ability to combat crypto-related crime.
Stablecoins make up the majority of illicit activities in cryptocurrencies, making up an estimated 63% of the total. The price stability and user-friendly nature of stablecoins have made them a perfect storm for popularity among cybercriminals. This makes them an attractive option for smuggling illicit payments quickly and under the radar.
Even with the increasing presence of stablecoins and other cryptocurrencies, Bitcoin is still the dominant currency used for illicit activity. Even today, it remains the preferred cryptocurrency for ransomware attacks and transactions on darknet markets. Bitcoin’s anonymity and decentralization still render it alluring for anyone operating outside the law.
Overall in 2024, an estimated 3.59% of all tokens launched were pump-and-dump or rug pull scams. These pump and dump schemes take advantage of the excitement and speculation around new cryptocurrencies, misleading investors and resulting in millions of dollars in losses. Such schemes are on the rise. In light of this, investors need to be more wary and diligent in researching any new tokens before making an investment.
Multiple North Korean cybercriminal organizations have been linked to some of the largest cryptocurrency heists. These syndicates have heisted as much as $660.5 million in a single caper and $1.34 billion in another! More importantly, their actions shed light on the widespread sophistication of state-sponsored cybercrime within the cryptocurrency sector.
Given evolving tactics and techniques of cyber attacks within the booming cryptocurrency sector, a multi-layered approach to security is imperative. We adopted new, stronger security protocols and increased monitoring and detection systems. We encouraged better partnership between key stakeholders in industry and law enforcement agencies. We are not against legitimate uses of cryptocurrency, and the entire cryptocurrency community should come together to address illicit activity. Joined together, they are better positioned to preserve the integrity of the digital asset ecosystem.
Just like the overall cryptocurrency landscape, their methods and tactics to exploit unsuspecting victims are constantly evolving. Countering these threats will only be possible through constant vigilance, innovation, and commitment to security best practices. The future of cryptocurrency security depends on the ability of the industry to adapt and respond effectively to the ever-changing threat landscape.
Among them, the compromise of private keys has become the most prevalent attack vector, realizing 43.8% of funds stolen worldwide. This scary fact highlights the real need for better security to protect these assets that are extremely valuable. Users and exchanges both need to make better key management the priority of all the fundamentals. These actions will go a long way toward preventing theft and unauthorized access.
By 2024, nefarious use of cryptocurrency could exceed $51 billion in value. This increase is a particularly alarming step-up in illegal crypto activity. This new projection serves as a clarion call for our industry. Most importantly, it underscores the critical need to identify vulnerabilities and strengthen internal security measures to combat the growing threat of nefarious activity.
In 2024, illegal pursuits have exploded to a record $40.9 billion. This figure serves to illustrate just how fast cybercriminals are taking advantage of vulnerabilities in the rapidly evolving cryptocurrency ecosystem. This shocking figure illustrates the urgency of the situation. We need to take urgent, targeted actions against bad actors in order to protect the reputation of the entire digital asset ecosystem.
In mid-February 2024 a major cyber attack plunged the cryptocurrency firmament into chaos. Bybit took the deepest hit of all, with losses just shy of $1.5 billion in Ether (ETH). This breach marks the largest ever digital theft in cryptocurrency today. It does a tragic job of reminding us what’s possible with large-scale exploits and more importantly shows us that we must have good security in place.
The attack on Bybit shows that all exchanges, even the biggest and best-funded, are susceptible to compromise and attack. This incident highlights the need for constant vigilance and updating of security measures. Exchanges need to spend on better security technologies and double down on their security protocols so they can protect user funds and avoid further attacks.
In 2024, our experts predict the total volume of illicit cryptocurrencies will exceed that of 2023. This trend is part of a net increase over several years, with illicit estimates increasing by an average of 25% per year since 2020. This alarming trend underscores the need for proactive measures to combat crypto-related crime and protect the integrity of the digital asset ecosystem.
Since 2020, the annual value of illicit activity has increased by an average of 25% annually. This concerning trajectory underscores the growing sophistication and prevalence of cybercrime in the world of cryptocurrency. This compounded growth rate shows an urgent need to address these vulnerabilities. We need to bolster our security practices in order to minimize the likelihood of nefarious events.
In 2024, an estimated 3.59% of all tokens launched were pump-and-dump schemes or rug pulls. This shocking figure is a testament to just how dominant fraud-driven crime has become in the crypto market. Investors need to exercise extreme caution before investing in any new tokens. Watch for scams. Do your homework to avoid falling victim to scams.
Indeed, stablecoins make up around 63% of all illicit activities in the crypto space. This points to the growing use among cybercriminals that seek to get money out fast and quietly. The growth of stablecoins’ adoption in illegal transactions is alarming. What we do need is much clearer monitoring and regulation to prevent them being misused.
While stablecoins and other cryptocurrencies have exploded in popularity, Bitcoin is still the most common cryptocurrency used in illicit finance. It’s often been used in ransomware attacks, as well as transactions on the darknet market. Unfortunately, the anonymity and decentralization of Bitcoin make it appealing to those who want to operate outside the reach of the law.
Scams and the laundering of stolen funds are spread across multiple assets, making it difficult to trace and recover illicitly obtained cryptocurrencies. Cybercriminals often use multiple cryptocurrencies to obscure where they acquired their money. This sadly makes the work of law enforcement and regulatory agencies more difficult as they continue to work on addressing the rise in crypto crime.
In 2024, we discovered a new kind of Doomsday scenario—compromise of private keys. Today, this issue has become the number one attack vector in cyber threats. This vulnerability serves as a reminder of the need for secure storage practices and strong security protocols for cryptocurrency users and exchanges to protect against the threat of hacking.
Overall, DeFi received a record level of attack in the first quarter of 2024. This was the region that suffered the most in stolen assets. The complex and very often unaudited nature of DeFi protocols further augments their desirability as hackable targets by cybercriminals seeking to exploit any vulnerabilities.
In 2024, races of cybercriminals associated with North Korea made off with about $660.5 million to $1.34 billion. This billion-dollar heist was indicative of the growing size and complexity of state-sponsored cybercrime in the cryptocurrency space. These recent incidents highlight the parallel, continuing need for international cooperation in the fight against cybercrime and the pursuit of consequences for the cybercriminals.
The cryptocurrency industry should be setting the bar for security and collaboration to protect against this rising trend of illicit actors. You’re going to deploy zero trust security measures. You’ll strengthen monitoring and detection systems and promote more cooperation among industry stakeholders and law enforcement agencies.
Cryptocurrency cyber attacks are more common, sophisticated and damaging than ever. To counter this growing and dynamic threat, we need a proactive, multi-dimensional approach to security. You don’t stay stagnant, though—you keep a constant eye on the threat landscape. You react quickly to new threats and make long-term investments in protective technologies and processing specialists.
The future of cryptocurrency security depends on the industry’s willingness and flexibility to move in this new direction. It can’t afford to do otherwise, especially given our increasingly dynamic threat landscape. We need to redouble our efforts on creativity and partnership. Through careful consideration of these best practices, we can better safeguard the integrity of the growing digital asset ecosystem.
