The industrial scale of crypto fraud
Recent analysis from blockchain security experts shows something concerning. Fraud in the crypto space isn’t just growing—it’s becoming industrialized. What I mean is that bad actors are now running sophisticated operations that feel almost like legitimate businesses, but with malicious intent.
Cyvers, a blockchain security firm, published their 2025 Web3 Security and Fraud Report. The numbers are pretty staggering. The industry recorded 108 separate incidents related to fraud or security threats last year. That’s a sharp rise from previous years, and it suggests we’re dealing with something more organized than random hackers.
Where the money went
According to the report, about $16 billion in crypto assets were linked to fraudulent activity in 2025. That’s a massive figure, and it spread across at least 140 different crypto exchanges and trading venues. Every major exchange saw a significant portion of their clients defrauded at least once, which tells you how widespread this problem has become.
Cyvers’ systems detected more than 4.2 million fraudulent transactions across 780,000 addresses. These were part of roughly 19,000 active fraud networks. Most of these fraudulent flows involved stablecoins like Tether (USDT) and USD Coin (USDC), along with ether (ETH).
The most organized threat, they found, was authorized fraud—especially pig butchering schemes. These aren’t quick scams. They involve long-term social engineering where bad actors build relationships with victims over time, using fake investment platforms to eventually drain wallets.
Security incidents are changing too
While fraud was the biggest driver of losses, security incidents still caused significant damage. The crypto industry lost $2.5 billion to hacks in 2025. That’s up from $2.36 billion in 2024 and $1.69 billion in 2023, so the trend is moving in the wrong direction.
Most of that $2.5 billion—over $2.2 billion—came from large-scale access control attacks. These involve compromised keys, permissions, and human error. Only about $292 million was lost to smart contract and code vulnerabilities, which is interesting because that’s what people often worry about most.
The new normal for attacks
Perhaps the most concerning finding is how attacks are evolving. The largest crypto theft in history happened last year—a $1.5 billion incident on the Bybit exchange. What’s troubling is that Cyvers said this attack, facilitated through a supply-chain compromise and legitimate signatures, didn’t initially look like a hack.
Market experts think this could represent the future of attacks: on-chain threats that appear normal at first glance. They blend in with regular activity, making them harder to detect until it’s too late.
Ethereum was the primary target, accounting for 70% of all funds lost across 33 large incidents. But other networks like BNB Chain, Bitcoin, and Sui also saw high-impact single events.
What strikes me about all this data is the scale. We’re not talking about isolated incidents anymore. We’re looking at industrial-level operations with millions of transactions across thousands of networks. The sophistication is increasing, and the attacks are becoming harder to distinguish from legitimate activity.
I think the industry needs to adjust its thinking about security. Traditional approaches might not be enough when fraud has become this organized and attacks can look so normal. It’s not just about better code or smarter contracts—it’s about understanding human behavior, social engineering, and how legitimate systems can be compromised in ways that don’t trigger immediate alarms.
