The cryptocurrency market experienced losses of $1.9 billion in 2023 due to hacks, marking a substantial 93.6% decrease from the previous year.

While this appears to be a positive trend, further examination reveals a bleaker outlook, with the frequency and sophistication of attacks on the rise, according to blockchain security auditor Hacken.

2023 Sees Onslaught of ‘Sophisticated Attacks’

Hacken’s 2023 security report shared with CryptoPotato revealed that the total amount lost due to hacks and scams decreased to $1.9 billion. The largest theft of the year involved Multichain, which saw $231 million drained from its bridge.

This is significantly lower than the Terra Luna incident of 2022, which wiped out over $40 billion in value, causing widespread collapses in the industry. Hacken described 2023 as a period of improved safety and better security practices.

However, the auditor recorded a 14% increase in the number of attacks compared to the previous year, with a notable surge in various types of hacks.

By far, the most damaging type of vulnerability this year was Access Control, where unauthorized access to hot wallets by hackers or insiders resulted in half of all stolen funds, averaging $31 million per incident. This includes breaches like those in Multichain and Atomic Wallet.

Flash Loan attacks followed, with a total stolen amount of just over $275 million, despite a higher number of incidents than Access Control. Meanwhile, Rug Pulls averaged $566,000 per incident, making them the second least damaging type of attack after closely related Honeypot scams.

Decoding Impact

2023 witnessed a departure from the previous trend, where centralized companies collapsed in succession due to mounting bad debt. Hacken’s findings reveal that the sector most heavily impacted was Lending and Borrowing, particularly smart contract-based money markets.

These platforms aggregate significant liquidity pools and provide loans to users against collateral. However, th