Crypto Exchange Hacks Down 30% on 2019

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  • Cryptocurrency exchange hacks are down 30% in 2020 compared to last year
  • DeFi exchanges and protocols are responsible for 50% of all such hacks
  • Improved security has reduced hacks on centralized exchanges

Cryptocurrency exchange hacks are down 30% compared to last year in a sign that both exchange security and security awareness among users is improving. Given that the bulk of the hacks were carried out on DeFi exchanges, hacks on centralized exchanges are in fact down much more that 30%, with the most notable being the KuCoin exchange hack in November, although the vast majority of funds were recovered from that hack.

Centralized Crypto Exchange Hacks Take a Dive

2019 saw 23 hacks, including big names like Cryptopia, Bithumb, Upbit, and Binance, with some $292 million stolen in the process. 2020 has seen a vast reduction in well-known names being hacked, with KuCoin the only high-profile exchange hacked this year, seeing some $275 million stolen.

However, in a sign that cryptocurrency exchange security and recovery tools are better than ever, more than 84% of the stolen funds were recovered.

DeFi Gain Percentage Share

The reason for crypto exchange hacks being as high as they are this year is almost exclusively down to DeFi, which accounted for some 50% of all 2020 hacks, according to Ciphertrace. This new breed of exchange has suffered at the hands of criminals and opportunists in the same way that cryptocurrency exchanges did in the early days of the ecosystem, with hackers taking advantage of loopholes in the new technology and the billions of dollars flowing into DeFi projects and exchanges.

bZx, Balancer, Uniswap, dForce, Harvest Finance, and Origin Protocol are among the DeFi projects who lost money to hackers in 2020, and with DeFi exchanges being decentralized there is little chance of recovering funds, except to threaten hackers or plead with them to do the right thing.

With $13 billion still locked in DeFi projects, the likelihood remains that 2021 will see a continued shift in crypto exchange hacks from centralized exchanges to decentralized ones, which hackers view as easier to penetrate and with more chance of successfully getting away with all the stolen funds.