Recent Technical Threats Facing Crypto Today

The blockchain keeps changing and so do bad actors. While we celebrate DeFi, Wallets, and Governance upgrades, hackers are finding loopholes to exploit leading to the technical threats facing crypto today. The ripple effects of their activities? Staggering. Saddam Hussein must have thought no one would beat his $1 billion dollar heist at the Central Bank of Iraq in 2003. How wrong was he? Roughly two decades later, Bybit will lose $1.5 billion dollars, and nobody will find the perpetrators.

This comparison shows another angle many fail to realize; threats to world of finance have existed long before Bitcoin. However, hackers leverage the blockchain’s anonymity and immutability to scale up the jig . As doubters question blockchain validity, crypto projects and protocols need to keep fighting to reduce crimes to the barest minimum.

In this article, we will address how bad actors contribute to the technical threats facing crypto today, how they keep up with its evolution, the impact of hacks on crypto, and answers to these threats.

Let’s dive in!

What are the recent technical threats facing crypto?

The following are ways malicious users fiddle with blockchain architecture at different levels;

Social Engineering attack

Bypassing security layers does not stop at knowledge of code and technical gibberish. Sometimes, the target is the human interacting with the systems. The hacker gets a user to click a wrong link, divulge sensitive information, or believe they’ve encountered a top influencer. It is a play on trust and emotions. Social engineering comes in different forms. Common ones include;

• Pretexting
• Phishing
• Baiting
• Impersonation

The most popular is phishing. A fraudster sends messages, links, and emails mimicking an established brand. To the untrained eye, nothing is fishy. On a second look, the warning signs jump out: a wrong email, a wrong address, and uncanny changes in the brand name. These red flags go unnoticed by those already goaded by quick gains or starstruck.

One recent phishing attack occurred in Coin Telegraph. In this case, the front end of the news outlet’s website was compromised with a pop-up. This pop-up claimed users had won token rewards and advised them to click the link for claims. The directive was for users to connect their wallets for prizes, worth up to $5,500. To feign legitimacy, the scammy smart contract boasted of an audit by CertiK. Phishing is becoming a staple with CoinMarketCap suffering a similar experience. Statistics show almost $2.2 billion stolen through malware attacks since 2024.

Flash loan attacks

The blockchain embraces all, and one huge step in this mission is flash loan. A flash loan allows a user to borrow and pay back within one transaction without collateral. It allows a user with meagre funds to explore DeFi opportunities. A flash loan opens up access to on-chain liquidity pools and comes at no cost to the borrower since it reverts on failure.

If an attacker can manipulate the DeFi protocol, they can play around with the spot price oracle. They proceed to increase the token price for collateral and lower the token price for debt. This margin allows the scammer to borrow more than programmed. Populating this attack across multiple attractions, the hacker keeps defrauding the protocol and leaves it with an uncollateralized position.

On May 22, Cetus on SUI was the target of this attack. Through the exchange’s Concentrated Liquidity Market Maker (CLMM), the hacker came upon SUI-based pools. They found a flaw in the Tick Account system that manages the liquidity range and made away with real tokens (SUI, USDC, Toilet, Haedal Staked Sui). Tokens worth around 220 million gone!

Reentrancy Attacks

Reentrancy Attacks exploit a flaw in smart contracts . The code is built in a fashion to fulfill transactions before updating the balance, and a hacker can reenter the contract and borrow more till there’s nothing left.

This happened on the Hundred Finance Protocol in 2022. In this case, the borrowfresh function was exploited. The XDAI chain uses post callback procedures for USDC , WETH, and WBTC. After taking an initial flash loan, he borrowed simultaneously across the different tokens, amassing 2,363 ETH. Then, the attacker spread these funds into 32 transactions on Tornado Cash to blow off any tails.

Crypto keys theft

Exchanges and wallets always warn users to guard their private keys jealously but they can still fall into wrong hands. Earlier mentioned methods including social engineering and phishing can help attackers to obtain these dire character strings. Other methods include cloud breaches, weak password generation, and malware infiltration.

Many individuals suffer this kind of attack every other day on the blockchain. However, projects don’t go unscathed.
WEMIX, a blockchain gaming platform, is a recent victim losing $6.1 million worth of tokens. The hackers stole passkeys from NILE, WEMIX’s NFT product. With these keys, the crooks executed 13 transactions unabated. It is believed they got the keys from a shared repository created by the game’s developers. To mitigate the damage , WEMIX went offline and migrated to a more secure infrastructure.

How do scammers still find vulnerabilities with developing tech?

The blockchain is growing in leaps and bounds with more amazing innovation expected. So, how do attackers keep up with such tenacious growth and still wreck havoc?

• Sophistication: Hackers constantly sniff around the base code to find foundational vulnerabilities to disrupt protocol irreparably. They can get help from AI to devise more targeted attacks that are harder to detect and more difficult to defend.
• Diversification: In the past, hackers eyed big centralized exchanges only, and it remains a worthy bounty. Today, they hunt down DeFi protocols, novel projects, and popular wallets; seeking gaps in smart contracts and underlying blockchain.

What is the impact of the recent technical threats facing crypto?

Damage done at one point gives off ripple effects that spread through the entire system. Immediately money goes out unauthorized, investors are left to grasp at straws. The chances of reimbursement is 50 – 50. While the exchange can completely go under if they have no cushion, it can also settle affected customers as Bybit did. Next up is the project. It is the duty of the team’s technical gurus to ensure no exploitable weakness within the infrastructure. An attack questions their credibility. Lastly, regulatory bodies take a closer look when breaches occur. Tighter restriction and growth constraints follow this scrutiny

How to prevent the technical threats to crypto?

More efforts must go into battling rampant attack on blockchain infrastructure. Experts anticipate an era of timely intervention in blockchain crimes. Some defensive measures include;

Community education

Users need to know what actions can put their funds at risk. Examples include saving pass keys in cloud storage, talking to an exchange rep via email (very fishy), and thinking your latest dm on X is actually from Elon Musk (can he really text you?). When users can tell the warning signs, they can avoid booby traps.

Investing in real-time intelligence

Protocols can use AI and machine learning to detect anomalies and deaden attacks before they escalate. These technologies can help price discovery from different liquid pools so malicious users cannot toy with spot prices when taking flash loans.

White hat hacking

There are ethical hackers who go around finding loopholes, but they can go rogue. Projects can take control with bug bounties to incentivize and reward white-hat hackers for protecting their platforms.

Conclusion

A successful exploit of technical threats facing crypto touches millions of people as they lose whopping amounts. Unfortunately, such an event gives a voice to the anti blockchain crowd. To bring everybody aboard, Web3 needs a better look in finance.
While financial crime is inevitable, the blockchain needs more efforts from stakeholders to improve on security. From educating users to collaborating with ethical hackers, entities can strive to repay the high level of trust vested in them.

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