In Q1 2023, there was a sharp drop in losses from DeFi protocol hacks, linked to sanctions against the Ethereum mixer Tornado Cash and lawsuits against hackers, according to analytics firm TRM Labs.
?: Crypto hacks are down (for now)
Following a record-setting 2022, which saw USD 3.7 billion in stolen crypto, new research from TRM Labs shows crypto hacks are down 70% in Q1 2023. What’s driving the trend and how long will last ? https://t.co/exxBwJKzjP— TRM Labs (@trmlabs) May 23, 2023
Experts say the factors have made it harder to launder funds.
During January–March, in 40 attacks, attackers stole $400 million.
The figure fell by 70% compared with the same period in 2022 and, overall, was lower than every quarterly figure from the previous year. The number of attacks did not change, but the average loss declined from $30 million to $10.5 million.
According to TRM Labs, regulatory actions against criminals contributed to the drop in hacks in the past quarter.
In October 2022, a group led by Avraham Eisenberg attacked Mango Markets and moved digital assets totaling about $116 million.
In December, U.S. prosecutors arrested Eisenberg on charges of fraud involving exchange-traded commodities and prices. In January 2023, the trader was charged by the CFTC and the SEC.
“Prosecution could signal to potential wrongdoers that even a victim’s consent not to pursue a lawsuit may not provide protection,” the specialists explained.
Another factor, according to TRM Labs, was the growth in hackers returning illicitly obtained funds. Experts recalled the transfers of Euler Finance $200 million and $850,000 Tender.fi.
Additionally, as reasons for the decline in attacks, experts cited exchanges’ adoption of AML standards and more sophisticated blockchain-analytics tools.
TRM Labs warned that momentum could worsen in the coming quarters due to the potential for large incidents. Experts found that in 2022, ten hacks accounted for 75% of the total losses.
CertiK estimated blockchain-project losses from hacks and fraud at $320 million.
Earlier, Moody’s analysts called the measures against the Mango Markets attacker a boon for DeFi.