Source: Chainalysis
Compiled by: Tao Zhu, Jinse Finance.
Cryptocurrency hacking remains an ongoing threat, with over $1 billion in cryptocurrency stolen in four of the past ten years (2018, 2021, 2022, and 2023). 2024 marks the fifth year of reaching this disturbing milestone, highlighting that as cryptocurrency adoption and prices rise, the amount vulnerable to theft is also increasing.
In 2024, the amount stolen increased by approximately 21.07% year-on-year, reaching $2.2 billion, while the number of individual hacking incidents rose from 282 in 2023 to 303 in 2024.
Interestingly, the intensity of cryptocurrency hacking attacks fluctuated around the first half of this year. In our mid-year crime update, we noted that the cumulative value stolen from January 2024 to July 2024 had reached $1.58 billion, approximately 84.4% higher than the stolen value in the same period of 2023. As we see in the chart below, by the end of July, the ecosystem was easily on track, potentially comparable to the over $3 billion seen in 2021 and 2022. However, the upward trend in stolen cryptocurrency in 2024 noticeably slowed after July and remained relatively stable thereafter. Later, we will explore the potential geopolitical reasons for this change.
In terms of the stolen amounts classified by victim platform type, interesting patterns emerged in 2024. In most quarters from 2021 to 2023, decentralized finance (DeFi) platforms were the primary targets of cryptocurrency hackers. DeFi platforms may be more vulnerable to attacks because their developers tend to prioritize rapid growth and market launch over implementing security measures, making them a prime target for hackers.
Although DeFi still accounted for the largest share of stolen assets in the first quarter of 2024, centralized services were the most targeted in the second and third quarters. Some of the most notable centralized service hacks include DMM Bitcoin (May 2024; $305 million) and WazirX (July 2024; $234.9 million).
This shift in focus from DeFi to centralized services underscores the increasing importance of security mechanisms commonly employed by hackers (such as private keys). In 2024, private key leaks accounted for the largest proportion of stolen cryptocurrency, reaching 43.8%. For centralized services, ensuring the security of private keys is crucial, as they control access to user assets. Given that centralized exchanges manage significant amounts of user funds, the impact of private key leaks can be devastating; we only need to look at the DMM Bitcoin hack, which resulted in a loss of $305 million, one of the largest cryptocurrency breaches to date, possibly due to poor private key management or lack of adequate security.
After a private key leak, malicious actors typically launder stolen funds through decentralized exchanges (DEX), mining services, or mixing services, complicating the transaction trail and making tracking challenging. By 2024, we can observe significant differences in the laundering activities of private key hackers compared to those utilizing other attack mediums. For instance, after stealing private keys, these hackers often turn to bridging and mixing services, while decentralized exchanges are more commonly used for laundering activities in other attack mediums.
In 2024, the amount stolen by North Korean hackers from cryptocurrency platforms will be more than ever before.
North Korean-related hackers are notorious for their complex and ruthless methods, often using advanced malware, social engineering, and cryptocurrency theft to fund state-sponsored operations and evade international sanctions. U.S. and international officials assess that Pyongyang uses the stolen cryptocurrency to fund its weapons of mass destruction and ballistic missile programs, posing a threat to international security. By 2023, North Korean hackers will have stolen approximately $660.5 million through 20 incidents; by 2024, this figure increases to $1.34 billion across 47 incidents, representing a 102.88% increase in the value stolen. These figures account for 61% of the total amount stolen that year and 20% of the total number of incidents.
Please note that in last year's report, we published information indicating that North Korea stole $1 billion through 20 hacking incidents. After further investigation, we determined that some of the previously attributed large-scale hacks to North Korea may no longer be relevant, therefore reducing the amount to $660.5 million. However, the number of incidents remained unchanged as we identified other smaller hacks attributed to North Korea. Our goal is to continuously reassess our evaluations of North Korean-related hacking incidents as we obtain new on-chain and off-chain evidence.
Unfortunately, North Korea's cryptocurrency attacks seem to be becoming increasingly frequent. In the following chart, we examine the average time between successful DPRK attacks based on the scale of exploitation, finding that the frequency of attacks across various scales has decreased year-on-year. Notably, attacks valued between $5 million to $100 million and those exceeding $100 million occur much more frequently than in 2023, indicating that North Korea is becoming increasingly efficient and rapid in carrying out large-scale attacks. This contrasts sharply with the previous two years, where their profits per incident often fell below $50 million.
When comparing North Korea's activities with all other hacking activities we monitor, it is clear that North Korea has been responsible for most large-scale attacks over the past three years. Interestingly, the amount involved in North Korean hacking incidents has been lower, and the density of attacks around $10,000 has also been steadily increasing.
Some of these incidents appear to be linked to North Korean IT professionals, who are increasingly infiltrating cryptocurrency and Web3 companies, compromising their networks, operations, and integrity. These employees often employ sophisticated strategies, techniques, and procedures (TTP), such as false identities, hiring third-party recruitment agencies, and manipulating remote work opportunities to gain access. In a recent case, the U.S. Department of Justice (DOJ) charged 14 North Korean nationals who were working remotely as IT professionals in the United States. The companies earned over $88 million through stealing proprietary information and extorting employers.
To mitigate these risks, companies should prioritize thorough hiring due diligence—including background checks and identity verification—while maintaining strong private key security to protect critical assets (if applicable).
Despite all these trends indicating North Korea has been very active this year, most of its attacks occurred earlier in the year, with overall hacking activity stagnating in the third and fourth quarters, as shown in earlier charts.
In late June 2024, Russian President Vladimir Putin and North Korean leader Kim Jong-un will also hold a summit in Pyongyang to sign a mutual defense agreement. So far this year, Russia has released previously frozen North Korean assets worth millions of dollars in accordance with UN Security Council sanctions, marking the ongoing development of the alliance between the two countries. Meanwhile, North Korea has deployed troops to Ukraine, provided ballistic missiles to Russia, and reportedly sought advanced space, missile, and submarine technology from Moscow.
If we compare the daily average losses from DPRK breaches before and after July 1, 2024, we can see a significant decrease in the amount stolen. Specifically, as shown in the chart below, the amount stolen by North Korea decreased by approximately 53.73% afterward, while the amount stolen by non-North Korean actors increased by about 5%. Therefore, in addition to shifting military resources towards the Ukraine conflict, North Korea, which has significantly strengthened its cooperation with Russia in recent years, may also have altered its cybercriminal activities.
The decline in funds stolen by North Korea after July 1, 2024, is evident, and the timing is also clear, but it is worth noting that this decline may not necessarily be related to Putin's visit to Pyongyang. Additionally, some events occurring in December could change this pattern by the end of the year, and attackers often launch attacks during the holiday season.
Case Study: North Korea's Attack on DMM Bitcoin.
A notable example of North Korean-related hacking attacks in 2024 involved the Japanese cryptocurrency exchange DMM Bitcoin, which was hacked, resulting in a loss of approximately 4,502.9 bitcoins, worth $305 million at the time. The attackers exploited vulnerabilities in the infrastructure used by DMM, leading to unauthorized withdrawals. In response, DMM, with the support of its group company, sought equivalent funds to fully repay customer deposits.
We were able to analyze the on-chain flow of funds after the initial attack; in the first stage, we observed that attackers transferred millions of dollars worth of cryptocurrency from DMM Bitcoin to several intermediary addresses before finally reaching Bitcoin CoinJoin mixing servers.
After successfully mixing the stolen funds using Bitcoin CoinJoin mixing services, the attackers transferred part of the funds to Huioneguarantee through some bridging services, an online marketplace associated with the Cambodian conglomerate Huione Group, a significant player in facilitating cybercrime.
DMM Bitcoin has transferred its assets and customer accounts to SBI VC Trade, a subsidiary of Japan's SBI Group, with the transition scheduled to complete in March 2025. Fortunately, emerging tools and predictive technologies are on the rise, which we will explore in the next section, preparing for the prevention of such destructive hacking incidents.
Using predictive models to prevent hacking attacks.
Advanced predictive technologies are changing cybersecurity by providing proactive approaches to protect digital ecosystems through real-time detection of potential risks and threats. Let's look at the following example involving the decentralized liquidity provider UwU Lend.
On June 10, 2024, attackers exploited UwU Lend's price oracle system to acquire approximately $20 million in funds. The attackers initiated a flash loan attack to alter the price of Ethena Staked USDe (sUSDe) across multiple oracles, resulting in incorrect valuations. Consequently, the attackers were able to borrow millions of dollars within seven minutes. Hexagate detected the attack contract and its similar deployments about two days before the exploitation.
Although the attack contract was accurately detected in real time two days before the exploitation, its connection to the exploited contract did not become evident immediately due to design reasons. Other tools, such as Hexagate's secure oracle, could further leverage this early detection to mitigate threats. Notably, the first attack, which resulted in an $8.2 million loss, occurred just minutes before subsequent attacks, providing another crucial signal.
Alerts issued prior to significant on-chain attacks have the potential to change the security landscape for industry participants, enabling them to entirely prevent costly hacking incidents rather than just respond to them.
In the following chart, we observe that attackers transferred the stolen funds through two intermediary addresses before reaching the OFAC-approved Ethereum smart contract mixer Tornado Cash.
However, it is important to note that merely accessing these predictive models does not guarantee the prevention of hacking attacks, as protocols may not always have the appropriate tools to take effective action.
Stronger encryption security is needed.
The increase in stolen cryptocurrency in 2024 highlights the industry's need to address an increasingly complex and evolving threat landscape. While the scale of cryptocurrency theft has not yet returned to the levels seen in 2021 and 2022, the aforementioned resurgence underscores the gaps in existing security measures and the importance of adapting to new exploitation methods. Effective cooperation between the public and private sectors is essential to tackle these challenges. Data-sharing programs, real-time security solutions, advanced tracking tools, and targeted training can empower stakeholders to quickly identify and eliminate malicious actors while building the resilience needed to protect crypto assets.
Furthermore, as the regulatory framework for cryptocurrencies continues to evolve, scrutiny over platform security and customer asset protection may intensify. Industry best practices must keep pace with these changes to ensure prevention and accountability. By establishing stronger partnerships with law enforcement and providing teams with rapid response resources and expertise, the cryptocurrency industry can bolster its theft prevention capabilities. These efforts are not only crucial for protecting individual assets but also for building long-term trust and stability within the digital ecosystem.