Why Have Hackers Become One of the Biggest Risks in Cryptocurrency?

The cryptocurrency industry is experiencing an unprecedented security crisis defined by frequent and destructive hacking attacks that erode trust. This article examines recent high-profile incidents, such as the 1.46-billion-dollar theft from Bybit, along with past cases to uncover the technical flaws, human vulnerabilities, economic incentives, and regulatory gaps driving these attacks.

The crypto industry has long been associated with stories of wealth creation. Yet beneath these success narratives lies a quietly escalating crisis. Recently, Bybit’s cold wallet was hacked, resulting in a loss of 1.46 billion dollars, marking the largest single attack in crypto history. Although the incident did not cause immediate systemic collapse, it stands as a stark warning about the industry’s vulnerabilities. Think about it: a skilled attacker can steal years’ worth of accumulated wealth in seconds with just a few keystrokes.

The importance of security cannot be overstated. Protecting assets is as crucial as surviving in the crypto world. Cyberattacks are no longer merely technical incidents; they have evolved into systemic risks threatening the very foundation of the industry.

As of February 2025, known crypto losses in just the first quarter exceeded 1.5 billion dollars. These losses stem from 20 separate attacks, highlighting both the rising frequency and scale of threats. For comparison, Immunefi data shows that from early 2024 to August of that year, 154 hacks and thefts resulted in 1.21 billion dollars in losses. Yet in just the first two months of 2025, that figure has nearly been surpassed.

Shocking Historical Hacking Incidents

Throughout crypto history, many protocols and exchanges have suffered major breaches. Some collapsed entirely, while others endured long and costly recovery processes.

In August 2021, the Poly Network cross-chain protocol was attacked, resulting in a loss of 611 million dollars in multi-chain assets. The hacker exploited a smart contract vulnerability in Poly Network’s Ethereum, BNB Chain, and Polygon wallets to seize funds. Interestingly, the attacker claimed it was done “just for fun” and returned most of the funds (around 300 million dollars remained unrecovered). This incident revealed how complex and fragile DeFi protocols can be.

In February 2022, the Wormhole cross-chain bridge was hacked, resulting in the loss of 120,000 wETH. The attacker exploited a vulnerability in the Solana VAA verification process, forged messages, and minted wrapped ETH out of thin air. The funds could not be recovered, severely damaging trust in cross-chain protocols.

In March 2022, the Ronin Network was hacked. Attackers seized 173,600 ETH and 25.5 million USDC, totaling 620 million dollars. The hacker gained majority control by compromising five out of nine validators on the Ronin network, achieving a 51% takeover and targeting the cross-chain bridge used by the Axie Infinity game. The FBI confirmed the attack was carried out by the North Korea-linked Lazarus Group. Sky Mavis spent years raising funds to compensate users, showing how costly such infrastructure weaknesses can be.
In October 2022, Binance’s cross-chain bridge was hacked, and 2 million BNB were stolen. The hacker exploited a smart-contract vulnerability in the BSC Token Hub, minting new BNB via fake withdrawal transactions. Binance acted quickly and froze most funds, but losses were still significant. This incident prompted the industry to rethink cross-chain bridge security design.

The cases above are only some of the most notable hacks causing massive losses. There have also been countless smaller attacks resulting in losses ranging from hundreds of thousands to millions of dollars.
More recently, major security breaches have occurred:

• February 2025: Stablecoin digital bank Infini suffered a 49.5-million-dollar loss after attackers covertly gained admin privileges and took control of the system.
• February 2025: Bybit suffered one of the largest attacks to date. More than 510,000 ETH (including native ETH and derivatives) was stolen, with total losses exceeding $1.4 billion. The hackers used UI spoofing, social engineering, and a delegatecall vulnerability to breach multi-signature devices, manipulate the cold wallet smart contract, and withdraw funds. The attack is suspected to have been carried out by North Korea’s Lazarus Group.
• November 2024: The DeFi platform Thala Labs was hacked, resulting in a loss of $25.5 million. However, with the collaboration of white-hat hackers and the community, all funds were recovered. This incident demonstrated how effective DeFi protocols can be in emergency situations and highlighted the critical importance of private key management.
• November 2024: The on-chain trading platform Dexx was attacked, resulting in a loss of 21 million USDT (over $150 million). The attack affected more than 1,000 users and over 8,000 addresses. It is suspected that the platform’s private keys were stored and transmitted in plain text, increasing the likelihood of insider involvement. The founder promised compensation, and victims filed lawsuits in multiple countries. However, the attacker’s assets have not yet been fully recovered.

Why Are Hackers So Widespread?

The rise in hacking incidents in the cryptocurrency industry is driven by a combination of technological, human, economic, and regulatory factors.

From a technical perspective, the irreversible nature of blockchain transactions makes it extremely difficult to recover stolen funds. The complexity of smart contracts often conceals security vulnerabilities. For example, the delegatecall vulnerability used in the Bybit attack demonstrated how this complexity can be exploited.

Human factors are just as critical as technical flaws. Social engineering attacks frequently succeed. Multi-signature participants can fall victim to deception, and employees may lack adequate security awareness. This neutralizes even strong security defenses.
Economically, high liquidity and anonymity in crypto make laundering stolen funds much easier. The potential for massive profit attracts organized hacking groups like the Lazarus Group. These groups operate under a low-risk, high-reward strategy. This creates a dangerous imbalance between the cost and reward of cyberattacks.
Finally, regulatory gaps amplify the problem. The decentralized nature of crypto provides freedom but makes standardizing security protocols and enforcing penalties challenging. Legal gaps create an open playground for hackers with low deterrence.

When combined, these factors turn the crypto ecosystem into a playground for hackers. This not only threatens technical security but also undermines user trust and overall industry growth. It is now crucial for the industry to confront these challenges and take collective action.

How Do Hackers Threaten the Foundation of the Industry?

Hackers have come to directly threaten the very foundation of the cryptocurrency industry. They undermine trust, market stability, and long-term growth prospects. First, they erode user confidence. Large-scale thefts not only panic individual investors but also push them to withdraw funds quickly. At the same time, institutional investors begin questioning the overall security of the crypto space. Such crises can trigger a bank-run-like effect, reducing liquidity and even pushing some platforms toward collapse. Second, hacking incidents often trigger sharp market volatility. For example, after 570 million dollars were drained from Binance’s cross-chain bridge, BNB price dropped dramatically, triggering panic sell-offs across the ecosystem. Cascading effects across DeFi protocols and DEXs deepened losses and further eroded market confidence.

Additionally, these attacks hinder industry development. Major thefts discourage potential investors and slow institutional capital inflows. Developers may avoid innovation due to growing security concerns. Following attacks like Ronin and Wormhole, cross-chain bridges and smart contract projects came under much stricter scrutiny.
On a deeper level, hackers expose the industry’s technical and governance weaknesses. While immutability and decentralization seem beneficial in theory, they act as a double-edged sword for security. Unless these structural issues are addressed, long-term reliability and mainstream adoption of crypto will remain limited.
Hackers are not just stealing funds; they are damaging the ecosystem itself. These threats are no longer isolated events but systemic risks affecting the entire industry.

How Can We Counter These Threats?

To counter the serious threat posed by hackers, the crypto industry must adopt a multi-layered defense strategy involving technological upgrades, education, collaboration, and insurance mechanisms.

The first line of defense is technology. The industry must tighten smart contract audits, use formal verification tools to detect vulnerabilities before deployment, and strengthen multisig systems and cold-wallet infrastructure to reduce single-point failures.
Second, education is critical. Both users and industry professionals should undergo regular security training to identify and stop social engineering attacks. Awareness of phishing attacks must be strengthened, and platforms should emphasize best practices for private-key security.

Collaboration is also key to strengthening security. Real-time threat intelligence-sharing networks should be established among exchanges, DeFi projects, and cybersecurity firms. Thala Labs’ successful recovery of 25.5 million dollars demonstrated how effective community collaboration can be. Additionally, balanced and constructive regulation can encourage platforms to prioritize security and act as a deterrent.

Finally, expanding crypto insurance mechanisms can provide a safety net for users.
When combined, these measures can not only curb hacker activity but also turn the current crisis into an opportunity to strengthen the industry’s security. This would encourage technological advancement, rebuild trust, and allow the crypto ecosystem to grow on a more resilient foundation.