According to on-chain analytics vendor Quantstamp, Web3 protocols and blockchain participants lost about $411.7 million in February to cryptocurrency fraudsters. Users lost money as a result of wallet key compromises, rug pulls and scams, and smart contract hacks, according to the company's monthly web3 security report.

The biggest haul came from cryptocurrency hackers who broke into digital wallet security and took $333.2 million in 29 days. An assault on Jeff Zirlin, a co-founder of Axie Infinity, was one of these cases. Hackers stole 3,248 Ether (ETH), valued at $9.5 million at the time, from two of Zirlin's wallets, according to a report by crypto.news.


In February, users lost over $69.5 million in cryptocurrency due to frauds and rug pulls. Rug pulls usually happen when dishonest people advertise a project with lofty goals and what appears to be a real blueprint. The cryptocurrency thieves take liquidity and vanish with the money after luring customers and deposits, leaving supporters with worthless tokens.

According to Quantstamp, smart contract hackers exploited vulnerabilities and defects in smart contract scripts used by decentralised protocols to steal up to $8.9 million. Each project has a different set of attack vectors, which might vary from reentrancy vulnerabilities that let hackers repeatedly call susceptible methods to flash loan hacks.

After billions of cryptocurrency were compromised last year—North Korea's Lazarus hacking squad, for example, stole over $300 million from web3 projects in 2023—on-chain security was a standard issue going into 2024. According to experts, security gets better as developers and entrepreneurs invest more money in security procedures and solutions.

As a result of the restrictions placed on mixing services, Chainalysis also reported a 29% decrease in cryptocurrency money laundering.