In 2024, crypto users faced a significant threat in the form of “pig butchering” scams, which cost a staggering $3.6 billion, as reported by Cyvers, a Web3 security company. This marked a 40% annual increase in cyber attacks compared to the previous year, with 165 incidents causing $2.3 billion in damages. While this amount was lower than the peak fraud levels in 2022, it highlighted the rise in complex schemes and breaches in 2024. Access control breaches accounted for the majority of the damage, totaling $1.9 billion, followed by smart contract vulnerabilities and address poisoning assaults.
The majority of these fraudulent activities took place on the Ethereum (ETH) blockchain network, involving around 150,000 addresses and 800,000 fraudulent transactions. Cyvers emphasized the ease of access on Ethereum as a key enabler for scammers to exploit victims through small payments and grooming methods. Deddy Lavid, CEO of Cyvers, stressed the importance of educating users, promoting transparency in exchange operations, and enhancing user vigilance to combat access control breaches and reduce the success rate of such frauds.
“Pig butchering” refers to a deceptive technique used by scammers to groom victims through unsolicited messages and fake crypto schemes, ultimately siphoning off significant amounts of money. Illicit funds are often laundered through both decentralized and centralized exchanges before being cashed out. The rise in crypto scams in 2024 included high-profile incidents such as the vulnerabilities in WazirX’s multi-sig wallet system, resulting in a $235 million loss, and the hack on DMM Exchange which lost $305 million due to compromised private keys.
Despite the significant losses incurred by various crypto exchanges in 2024, efforts were made towards recovery and rehabilitation. Approximately $1.3 billion was returned to victims, largely through on-chain detectives like ZachXBT and bug bounty programs. The first quarter of 2024 witnessed the highest number of incidents, with 53 reported, while Q3 saw the highest losses amounting to approximately $760 million. The decrease in activity and losses in Q4 signaled progress in addressing vulnerabilities and enhancing security measures within the crypto space.
As the crypto landscape continues to evolve, it is crucial for users to remain vigilant and educated about potential scams and security threats. By promoting transparency, enhancing security protocols, and implementing robust recovery initiatives, the industry can mitigate risks and safeguard the interests of investors and users. Collaborative efforts between industry stakeholders, regulators, and law enforcement agencies are key in combating fraud and ensuring a safe and secure environment for crypto transactions and investments.
