Crypto market loses $486M in July, biggest loss since 2022: Report.

Crypto market loses $486M in July, biggest loss since 2022: Report.

The Troubled Waters of the Blockchain Industry: A Closer Look at July 2023

Image Source: De.Fi

The cryptocurrency market has hit a rough patch, experiencing its worst month of 2023, as reported by Web3 outlet De.Fi to Cointelegraph1. In July alone, losses amounted to a staggering $486 million, surpassing the total losses of the entire previous year by more than sixfold2. This dramatic downturn came on the heels of various high-profile hacks and exploits, as well as increased legislative scrutiny of cryptocurrencies and digital assets.

The Inadequate Recovery Efforts

In a document shared with Cointelegraph, researchers at De.Fi expressed their concern over the insufficient efforts to recover lost funds in the cryptocurrency space3. Out of the $486.35 million lost during July, only $6.15 million has been successfully recovered, leaving approximately 99% of the stolen funds still unrecovered4. According to the researchers, a swift and robust recovery process is of utmost importance to mitigate the impact of such unfortunate incidents5.

These findings highlight the critical role that the blockchain industry must play in safeguarding and recovering lost or stolen digital assets. Failing to adequately address these issues not only jeopardizes the trust and confidence of investors and users but also undermines the security and stability of the entire ecosystem. It is imperative that industry stakeholders, including blockchain developers, exchanges, and regulators, come together to enhance recovery mechanisms and prevent further losses.

Uncovering the Origins of Losses

The report from De.Fi reveals that the majority of losses occurred within the Ethereum network, accounting for $447 million lost across 36 cases6. Notably, the Multichain hack accounted for $231 million, while the Alphapo exploit resulted in losses of approximately $100 million7. Following Ethereum, the Base network witnessed a single case resulting in a loss of $23 million, while Binance reported losses of nearly $11 million across 18 cases8.

Categorizing Losses

“Access control issues” emerged as the leading cause of the funds lost in July, totaling $364 million9. These issues highlight the significance of robust security measures in protecting digital assets from unauthorized access or exploitation. Additionally, rugpulls—a form of scam where developers abandon or drain liquidity from a project—contributed to losses amounting to approximately $36 million, with over 38 reported cases10. Reentrancy attacks, which exploit a vulnerability in the smart contract code, resulted in losses valued at around $78 million11.

Despite these prevalent issues, the good news is that no exit scams were reported during July12. This absence of exit scams provides some relief within an otherwise challenging situation and underscores the importance of transparency and trust in the blockchain industry.

The Way Forward

As the blockchain industry continues to navigate through these troubled waters, there is an urgent need for concerted efforts to improve security, recovery, and regulatory frameworks. Blockchain developers must prioritize robust access control mechanisms to prevent unauthorized access to user funds. Exchanges and wallets must also reinforce security protocols, employing advanced authentication measures and implementing comprehensive auditing and monitoring systems.

Regulators have a crucial role to play in establishing a conducive environment for blockchain and cryptocurrency operations. By fostering innovation while implementing rigorous oversight, they can strike a balance that safeguards investor interests and minimizes risks. Furthermore, collaboration among industry participants is essential to develop best practices, share security insights, and establish standardized protocols for recovery efforts.

In conclusion, the cryptocurrency losses experienced in July 2023 serve as a stark reminder of the challenges facing the blockchain industry. By addressing these issues head-on and leveraging collective expertise, the industry can build a more resilient ecosystem that instills confidence in digital assets and their recovery mechanisms.


  1. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  2. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  3. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  4. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  5. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  6. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  7. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  8. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  9. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  10. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  11. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

  12. De.Fi, Cointelegraph. (2023, July). Losses by chain in July 2023. Source: De.Fi↩︎

We will continue to update Phone&Auto; if you have any questions or suggestions, please contact us!

Share:

Was this article helpful?

93 out of 132 found this helpful

Discover more

DeFi

Coinbase's Blockchain Solution: Ending Six Consecutive Quarters of Losses?

Coinbase is introducing its Ethereum layer-2 scaling solution Base, aiming to potentially turn around the company's t...

DeFi

Terra interim CEO's progress constantly derailed by accusations.

During a July 20 Twitter Spaces, Terraform Labs interim CEO Chris Amani highlighted the determination of the company ...

DeFi

Curve DAO has received a $5 million boost from Binance and is now looking to expand on the BNB chain.

Binance Labs, the highly regarded venture capital and incubation arm of Binance, has made a significant and promising...

DeFi

Circle launches MPC wallet beta for Ethereum, Polygon, Avalanche.

The innovative service enables developers to effortlessly host their nodes or benefit from Circle's reliable infrastr...

Opinion

CoW Protocol A Potential Project with High Income Expectations and MEV Business Enhancement

CoWSwap's current market share in the DEX aggregator market is only 13%, but it has been growing at a rate of 70% in ...

DeFi

Uniswap criticized for imposing business source license on v4 code.

Uniswap, which is the leading decentralized exchange (DEX) in the decentralized finance (DeFi) industry, has received...