Almost $600M Lost to Crypto Heists, North Korean Hackers Bag $112M, $200M Crypto Fraud unveiled, and VC rugging — September 2023 Crypto Crime Report is Here!
More than $586 MILLION was lost to crypto crimes this September alone!
Largely due to:
1 — The biggest crypto hack of 2023 taking place when Mixin Network lost a staggering $200 million to a private key exploit. A hacker compromised the Google Cloud service used by Mixin and recovered the private keys of deposit addresses and Mixin hot wallet addresses!
2 — The shocking ongoing meltdown of a once prestigious Hong Kong crypto actor — JPEX — accused of operating, at the very least, a $191 million financial fraud. The full extent of the fraud is still yet to be known, but it is expected to be revealed in the following weeks once all the victims come forward. Anecdotally, one of JPEX’s suspects was literaly caught red-handed while shredding and bleaching files!
After this kind of introduction, stating that September 2023 was relatively tame and uneventful may seem dubious, but numbers don’t lie.
We went through a very intense and highly criminal summer with more than 170 crypto crimes recorded and more than $1 billion lost to them.
Although the September losses are mind-boggling, they do not offer a true reflection of the crypto criminal activity that took place.
“Only” 30 crypto crimes were recorded, and the top 5 crimes alone yielded $540 million (out of $586 million) to their perpetrators.
This is due in large part to the nosedive in exit scams/rug pulls.
As previously stated, summer is the high season for them because scammers profit off members of the Web3 community being away, enjoying life, and touching grass to pull the rugs in almost complete silence and indifference. In the past three months, there were over 100 rug pulls, but September marked a notable decline with only four reported incidents.
One rug pull, however, was of note!
It was christened as the first of its genre and dubbed by the community as a ‘VC Rug.’
On September 5th, Synapse, a cross-chain bridge, announced a ‘liquidity rug’ event initiated by an ‘unknown liquidity provider’ in response to a sharp decline in the native token’s price. This event involved a liquidity provider selling nearly 9 million SYN tokens and removing all stablecoin liquidity from the bridge.
The “unknown liquidity provider” was revealed to be Nima Capital, one of the long-term capital partners of the project which had received 10 million SYN tokens, approximately $3.7 million, on April 5, 2023, from the project. In return, it was agreed that they would lock $40 million worth of liquidity in SYN.
After the dump, eight months before the agreed governance proposal (of course!), Nima Capital went dark. Their website went offline, and they locked their X/Twitter account.
The most worrying revelation this month, though, was not how North Korean state-sponsored hackers, the Lazarus Group, are using the crypto space anew as their favorite hunting ground like in the good old days of 2022 after successfully and successively hacking Stake, CoinEX, and Reminato for a grand total of $112 million, as well as being highly suspected of being behind the $200 million Mixin hack.
Nope.
It has come from research led by numerous blockchain security experts revealing that at the very least, $35 million was silently stolen in six-figure cryptocurrency heists from retail investors, and it could be only the beginning.
Taylor Monahan, the lead product manager of MetaMask, was on the hunt in the past six months, looking for a cue that would explain how so many “security-conscious” and long-term crypto users could see their wallets being siphoned out of the blue with nothing to indicate it could be due to security breaches or wallet drainers.
She was able to successfully connect the dots to a single common point: LastPass Vault.
In November 2022, the password manager service LastPass disclosed a breach in which hackers stole password vaults containing both encrypted and plaintext data for more than 25 million users.
The 150 victims of this unidentifiable crypto heist had all stored their secret seed phrase on LastPass.
Furthermore, it could all be traced back to a unique signature linked to monthly crypto heists of two to five million dollars that date back to December 2022, one month after the LastPass breach was revealed.
Leading blockchain security researchers allege that some of LastPass’ encrypted vaults were cracked to access to the crypto credentials stored within.
Seed phrases that were stored in LastPass vaults should be considered compromised.
Last but not least, as we predicted months ago, supply chain attacks are popping up more and more in the crypto space.
In cybersecurity, what qualifies as a supply chain attack is a cyberattack that targets organizations and attempts to inflict damage by exploiting the “weaker link(s)” and their vulnerabilities in the supply chain network.
The “Supply Chain Network” is every intermediary and organization used to operate a business.
As a result, supply chain attacks have become one of the most dangerous security threats for businesses and organizations at large.
This month alone, two supply chain attacks took place in the crypto space.
Ethereum-based automated market maker Balancer’s frontend was compromised, leading to a $240,000 loss when their DNS service provider EuroDNS was targeted by a social engineering attack.
Four days later, the Mixin hack took place.
This time around, it was their cloud service provider, Google, that was successfully breached and enabled the private key exploit that resulted in the $200 million loss.
This latest hack, due to the significant damage it caused, suggests that supply chain attacks could become one of the major threats in the crypto industry in the years to come, as it has for everyday economic actors.
Our report ends here!
See you all next month for another crypto crime report.
Until then, stay safe!
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