Byline: Hannah Parker 

Although October has traditionally been associated with bull markets, in 2022 it has also overtaken that month as the most common for cryptocurrency hacks. Barely halfway through the month, the DeFi ecosystem has already experienced nearly a dozen hacks that resulted in losses of hundreds of millions of dollars.

Why Crypto Scams Happen

Cryptocurrencies that lack a single controlling authority, like Bitcoin, offer this critical advantage. Instead, they are controlled by a pre-programmed, well-defined algorithm. By eliminating the role of humans, the network as a whole becomes transparent and unchangeable.

According to Bitcode Method, the main reason why cryptocurrency scams are prevalent is that compared to conventional bank transfers, sending cryptos directly between two parties is quick and affordable. Users can complete the transaction without worrying about adhering to many rules because there is no central authority or mediator.

So, why is theft and fraud in cryptocurrency so prevalent? As crypto corporations have fewer resources to detect fraudsters in the first place, this is one of the main reasons why it’s one of the best things you can steal, is instantly transferable, is not reversible and is fungible.

According to a 2022 study by the Federal Trade Commission (FTC), victims were duped out of $139 million last year by cryptocurrency romance scammers. But there are many different kinds of scams. More than 46,000 consumers reported losing more than $1 billion in cryptocurrency, according to data from the FTC.

Exploiters Continue to Target DeFi with $718 Million Stolen only One Month 

Speculators are referring to October 2022as “Uptober” since data suggests it could be bullish for Bitcoin. Investors often look forward to October after September’s “Rektember,” which has typically been friendlier to the cryptocurrency market for years.

Over the past nine Octobers, Bitcoin alone has been green seven times, with the only red ones occurring in 2018 and 2019. The upward trend from the previous year, which reached a peak of almost $66,000, also picked up steam in October.

However, the “Uptober” story didn’t have the expected impact on decentralised money. In fact, when the month had more than half of the month left, October has already surpassed the previous record-breaking year for hacking activity.

No Threat For DeFi

The blockchain intelligence company disclosed that in only one month of October 2022, $718 million was stolen via DeFi protocols over 11 separate thefts. The most recent number surpassed March 2022 when there were the most hacks when the Ronin bridge was compromised for more than $600 million. At this rate, 2022 is projected to overtake 2021 as the most prolific year for hacking ever, according to Bitcode Method.

Through 125 attacks thus far in 2022, hackers have profited by more than $3 billion.

In contrast to 2019, which was when hackers would target centralised exchanges, the more recent sequence of hackers, works toward exploiting and hacking data.. Fast forward three years and DeFi protocols make up most targets. Malicious entities continue to be drawn to cross-chain bridges, which have large amounts of bitcoin kept to allow the transfer of tokens across blockchains.

Three bridges were breached in October 2022, and approximately $600 million was stolen, accounting for 82% of the month’s losses and 64% of the year’s losses.

October is the Season For Crypto Exploitation

Mango Markets DeFi, situated in Solana, may have lost up to $100 million due to an exploiter’s successful manipulation of an oracle price-drained liquidity. To purchase a permanent futures contract for the MNGO token and engage in trading against it, the hacker of the self-funded economic attack stocked up on $5.5 million worth of USDC, as was previously reported.

By skillfully manipulating the token’s price, the perpetrator could obtain Mango treasury loans, deplete the liquidity, and cause the token to crash.

In the string of DeFi assaults, TempleDAO was yet another target. The attacker loaded the wallet with money from the Binance cryptocurrency exchange. The protocol suffered a loss of 1,831 ETH, or around $2.3 million. The Rabby Swap smart contract was hacked on the same day, losing $200,000 due to the hacker’s successful use of a flaw in the smart contract.

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Despite the constant cryptocurrency hacks and attacks, it highlights that additional security needs to be built and tested, making cryptocurrency more secure as time goes on. Secure production of cryptographic keys and seeds is necessary for a cryptocurrency system. Consider paying particular attention to secrecy and unguessable figures when assessing the security measures in place at your company. Newly generated keys or seeds are protected by confidentiality to prevent unauthorised access. We have seen popular cryptocurrencies, like Ethereum, move to constantly improve, secure, and make ETH accessible through the Merge, which has brought plenty of changes. DeFi is still a new industry that is learning, growing and making changes on the way. So, it’ll only be time before it is made more secure against hackers.