Hackers are stealing massive amounts of cryptocurrency on a semi-regular basis, totaling $1 billion this year alone.
Crypto bridges, designed to allow users to move crypto assets from one blockchain to another, are proving to be major security liabilities for the industry. They are often slapped together to quickly address the needs of growing companies and platforms, presenting glaring vulnerabilities and — like everything else in the crypto world — little investor protection.
Just this week $625 million was stolen from the sidechain set up to complement the popular play-to-earn cryptocurrency game Axie Infinity. Someone was able to exploit vulnerabilities in the Ronin Bridge, a network created to allow players to transfer digital assets in and out of the game. It took 6 days for the company to even realize the funds were stolen.
The game's parent company, Vietnam-based Sky Mavis, promised to refund the lost crypto, mostly stolen from its player base, some of whom earn a living playing the game in developing countries. Sky Mavis raised $152 million last year in a round led by Bay Area VC Andreessen Horowitz, setting its valuation at over $3 billion. Needless to say, its investors will not be happy about its sudden massive spike in liabilities.
In February, another crypto bridge, Wormhole, was hacked for $322 million. A hack in January on the bridge for the decentralized finance platform Qubit totaled $80 million.
With two of the biggest crypto hacks of all time happening in just 3 months of 2022, this years financial bloodletting is on pace to meet last year's target. In 2021 over $4 billion of cryptocurrency was stolen by hackers. This includes a $610 million hack of the Poly Network (which was later returned by the "white hat" hacker who did it just to prove the existence of a security bug) and $196 million from BitMart.
Despite some firms' propensity to lose GDP-sized sums of their customers' money, investment in the cryptocurrency-related companies has never been hotter. So far this year $10.1 billion has been raised this year for companies in the cryptocurrency/blockchain sector in 546 deals, according to Pitchbook. That means the space could be on track to out-raise last year's total of $32.9 billion.
