DeFiYield.app has released their full 2022 Crypto Scam Report. This yearly report covers the largest cryptocurrency hacks and scams of the year.
According to DeFiYield’s REKT crypto scam database, $48.9 billion was lost in 2022, which is over 500% increase from 2021.
The 5 biggest crypto losses of 2022
Here are the 5 biggest crypto losses of 2022:
1. Terra Classic — $40b (May 8)
Terra Luna ecosystem one of the largest crypto projects to collabs began in May 2022.
Traders sold off $USTC in a Curve liquidity pool, leading to $USTC depreciating. $LUNC was then minted rapidly as people rushed to redeem their stablecoins. Market cap $LUNC fell below $USTC, preventing redemptions.
2. Genesis — $2.8b (November 10)
Genesis revealed that it had $175m trapped in an FTX account. Withdrawals were halted on the platform.
This included customer funds deposited in Gemini’s Earn program and loaned to Genesis.
3. Celsius — $1.19m (CeFi, July 13)
Celsius Network, a centralized exchange and lending protocol, filed for bankruptcy in July. The company revealed a $1.2b balance sheet deficit.
The project halted withdrawals a month prior, citing “extreme market conditions”.
4. FTX — $1.0b (November 11)
FTX, Alameda Research, and affiliated companies declared bankruptcy, with funds lost estimated between $1-2b.
November revealed that Alameda’s collateral was dominated by FTX’s native token, $FTT. Suspicion that FTX was insolvent, prompted customers to withdraw billions from the exchange. FTX then declared bankruptcy.
5. BlockFi — $1.0b (November 11)
Crypto lending platform BlockFi halted withdrawals and filed for bankruptcy due to exposure to FTX and Alameda.
BlockFi estimated liabilities between $1-10b.
6. Voyager — $1.0b Lost (CeFi Contagion, May 26)
In late May 2022, publicly-listed Voyager crypto platform filed for Chapter 11 bankruptcy, revealing more than $1 billion in liabilities.
Following the announcement, the Voyager stock price dropped over 12%.
Operations on the platform had been halted due to its significant exposure to the failed Three Arrows Capital, a crypto hedge fund that was unable to meet margin calls and also filed for bankruptcy. According to the filing, Voyager has estimated liabilities of between $1 billion and $10 billion.
7. Bitcoin Sheikh — $766m Lost (Ponzi Scheme, October 7)
The Bitcoin Sheikh project was arrested for operating a Ponzi scheme. While this does not represent a new loss, the authorities uncovered and seized assets worth $766 million.
The Brazilian authorities reported the discovery of a Ponzi scheme that was headed by Francisco Valdevino da Silva, otherwise called the “Bitcoin Sheikh”. They claimed that De Silva had exploited hundreds of people through the pretense of 20% returns.
According to the authorities, their token lacked proper liquidity or backing and even had a few celebrities on their list of exploited investors, such as Sasha Meneghel, a model who had lost $230,000.
8. Ronin Bridge — $625m Lost (Bridge Exploit, March 29)
Apart from CeFi failures, 2022 was also the year of the bridge exploit.
On March 29, the Ronin Network, an Ethereum-based sidechain that hosts the popular play-to-earn game Axie Infinity, discovered that its validator nodes had been compromised.
The attack resulted in the drainage of 173,600 Ethereum and 25.5M USDC from the Ronin bridge in two transactions. It is believed that the attacker used hacked private keys to forge fake withdrawals, accessing the system through a gas-free RPC node.
Binance was able to identify and recover $5.8 million in funds that had been spread across 86 accounts and moved to their exchange. In response to the hack, Binance led a funding round that raised $150 million to partially repay affected users and ensure the continuation of operations on the Ronin Network.
9. Wormhole Bridge — $625m Lost (Bridge Exploit, February 2)
In February 2022, the Wormhole bridge was compromised by an attacker who bypassed the verification process and made away with 120,000 $WETH.
The attacker minted 120,000 wETH on Solana, then redeemed 93,750 wETH for ETH worth $254 million onto the Ethereum. Using some of these funds, the attacker purchased SportX ($SX), Meta Capital ($MCAP), Finally Usable Crypto Karma ($FUCK), and Bored Ape Yacht Club Token ($APE).
The remaining wETH was swapped for SOL and USDC on Solana, with the hacker’s Solana wallet now holding 432,662 SOL ($44 million). It is believed that the issue was with the signature verification process, which allowed for an unverified call by the attacker.
Investors were made whole by Jump Trading, the mother company behind the Wormhole bridge, which replenished the stolen ETH.
10. Nomad Bridge — $190m Lost (Bridge Exploit, August 1)
The Nomad bridge is an interoperability protocol that connects five different blockchains: Avalanche, Ethereum, Evmos, Milkomeda C1, and Moonbeam. An operational error made by the Nomad team, which was pointed out in an audit report by Quantstamp, enabled an initial attack on the protocol, in which 100 (WBTC) were extracted.
The error, which marked the zero root (0x00) as acceptable, allowed every message to be auto-proven by default and enabled the attacker to process transactions without any proving by calling the “process()” function.
This information spread within the community, and hundreds of EOA’s began extracting assets such as $WBTC, $FXS, $C3, $DAI, and $USDC from the bridge. Among the looters were both reputable hackers from previous exploits, such as the Rari Capital exploit, and white hat hackers who intended to return the funds. As of now, approximately $32 million have been returned to the Nomad Recovery Funds Address.
DeFi Exploit Trends
In 2022, greatest losses in Crypto were in CeFi and Stablecoins, with a staggering loss of over $41b. Rugpulls were the most common DeFi exploit, averaging more than one rugpull every 3 days.
Smart contract risk remains a key threat: Almost half of 2022’s exploits were smart contract-related.
Funds recovered this year: $901m, up from $648m last year.
You can search for any crypto scam in the DeFiYield’s REKT Database.
Read Also: The Crypto Industry Lost $4B In 2022, Mostly Through Hacks