Blockchain Security and Regulation Monthly Recap of May: $454M lost in attacks

According to Beosin Alert, in May 2023, the number of various security incidents and the amount involved increased greatly compared with April. In this month, more than 28 typical security incidents occurred and the total loss of various security incidents was about $454M, which is up about 349% compared with April. 

The biggest security incident in May was the attacks on DMM Bitcoin, which caused a loss of $300M. In addition, there were two cases of hacking and the loss of each case was more than $10M. Gala Games suffered a loss of $22.5M and Sonne Finance lost about $20M due to contract vulnerabilities. This month saw a significant increase in phishing scams, with several phishing incidents losing more than $1M, including one address poisoning scam with a loss of $72M. Crypto crimes continued to increase this month, with several crimes involving more than $100M.

Attacks

『12』Typical Security Incidents

No.1 On May 5, GNUS on Fantom was attacked, causing approximately $1.27M in loss.

No.2 On May 9, Bloom on Blast was attacked, causing approximately a loss of $540,000. 90% of the stolen funds have been recovered (minus the 10% as bug bounty).

No.3 On May 10, Galaxy Fox, a Web3 game project, was attacked and lost about $300,000.

No.4 On May 10, Tsuru on Base was attacked, causing approximately a loss of $410,000.

No.5 On May 14, Predy Finance, a DEX on Arbitrum, was attacked and lost about $460,000.

No.6 On May 15, Alex Lab, a Bitcoin DeFi project, lost a total of about $6.3 million on both Stacks and BSC chains due to the theft of private keys.

No.7 On May 15, Sonne Finance, a Compound fork project on Optimism, was attacked for contract vulnerabilities, resulting in a loss of $20M.

No.8 On May 16, Pump.Fun on Solana was attacked, causing approximately $1.9M in loss. A former employee of the project publicly admitted the theft on Twitter.

No.9 On May 20, Gala Games, a Web3 gaming platform, was hacked. The hacker minted 5 billion $GALA tokens and has returned approximately $22.5 million worth of $ETH.

No.10 On May 21, TonUP, a Launchpad platform on TON, was attacked because engineers misconfigured script parameters, resulting in a loss of approximately $107,000.

No.11 On May 26, Normie, a memecoin on Base was attacked and lost about $490,000.

No.12 On May 31, DMM Bitcoin, a crypto exchange in Japan, was attacked and lost up to $300 million. So far, the lost 4,502 $BTC were distributed to 10 addresses.

Phishing/Rug Pull

『6』Typical Security Incidents

No.1 On May 3, a whale address suffered from address poisoning with a loss of $72M.

No.2 On May 14, Pii Park on Polygon had a Rugpull and the deployer made a profit of about $490,000.

No.3 On May 14, an address beginning with 0xff49 suffered from a phishing scam by Pink Drainer, resulting in a loss of approximately $1.66M.

No.4 On May 16, an address beginning with 0x719e suffered from a phishing scam, resulting in a loss of approximately $1.25M.

No.5 On May 18, an address beginning 0xee6a suffered from a phishing scam, resulting in the loss of approximately $5.6M worth of Pendle yield tokens.

No.6 On May 26, an address beginning with 0x2154 suffered from a phishing scam, resulting in a loss of approximately $6.9M.

Crypto Crime

『10』Typical Security Incidents

No.1 On May 2, the FBI broke up a crypto Ponzi scheme involving a total of $43M.

No.2 On May 10, Jilin police cracked a case of illegal operation of underground banks using virtual currencies, involving about 2.14 billion yuan.

No.3 Alexey Pertsev, one of the developers of the Tornado Cash, has been found guilty of money laundering and sentenced to 64 months in prison in the Netherlands.

No.4 On May 15, Chengdu police recently detected a case of underground bank with USDT as the medium, involving up to 13.8 billion yuan.

No.5 On May 15, Canada's "King of crypto" and his associates were arrested and accused of defrauding investors of $30M through a crypto and forex investment scheme.

No.6 On May 17, the U.S. Department of Justice arrested two Chinese nationals on suspicion of leading a money laundering scheme related to an international crypto investment scam amounting to at least $73M.

No.7 the U.S. arrested and charged a Taiwanese man with running a darknet drug marketplace, allegedly using the site to sell more than $100M worth of illegal narcotics, including fentanyl using crypto.

No.8 On May 24, Jian Wen, a Chinese-British woman, was sentenced to 6 years and 8 months in prison by the British court for helping to participate in the money laundering case of 61,000 bitcoin in the United Kingdom.

No.9 On May 26, the former president of Heartland Tri-State Bank in the United States pleaded guilty to embezzling $47.1M and causing the bank's collapse, with the embezzled funds being transferred into crypto assets.

No.10 Turkey has detained 127 people suspected of "international fraud through a Ponzi scheme" that allegedly stole more than $1 billion over the past few years.

Regulation

No.1 On May 7, Emilio B. Aquino, Philippine Securities and Exchange Commission (SEC) Chairman, said that the commission plans to introduce a regulatory framework for crypto assets and their trading in the second half of this year. Crypto exchanges targeting Filipinos must obtain the necessary licenses required by Republic Act No. 8799 before starting operations.

No.2 On May 22, the US House of Representatives passed a bill to create a new legal framework for digital currencies, the 21st Century Financial Innovation and Technology Act (FIT21), by a vote of 279 to 136, which aims to clarify the regulatory responsibilities of the US SEC and CFTC regarding digital assets.

No.3 On May 28, the South African Financial Intelligence Centre (FIC) proposed a directive on the transfer of crypto assets. The directive follows the licensing of 75 crypto asset service providers (CASPs) by South Africa's Financial Sector Conduct Authority. FIC aims to tighten regulation by requiring CASPs to impose more detailed and stricter requirements on crypto transactions.

No.4 On May 29, Canada is expected to adopt the International Crypto Asset Reporting Framework (CARF) for taxation by 2026, which will introduce new reporting requirements for crypto asset service providers (CASPs), such as crypto exchanges, crypto asset brokers and dealers, and crypto asset ATM operators whether it's an individual or a business entity.

No.5 On May 31, Michael Wong, Deputy Financial Secretary of Hong Kong, delivered a keynote speech at the 2024 Caixin Summer Summit, saying that Hong Kong will continue to fully promote financial innovation, focusing on areas including DeFi (decentralized finance) related to financial technology, green finance, Web3, virtual assets, etc.

In view of the current new situation in the field of blockchain security and regulation, Beosin concludes:

In general, the losses of security incidents greatly increased in May 2024. This month's attacks involved a number of chains, including Ethereum, BNB Chain, Blast, Fantom, Stacks, Optimism, Arbitrum, Solana, Ton, Base, indicating that hackers are looking for opportunities on different chains, It is suggested that all projects and users should enhance the awareness of safety protection. Phishing scams have increased significantly this month and users are advised to keep private keys safe, carefully verify signature information, and carefully check address correctness before transferring crypto assets.