Crypto: 80% Of Hacked Crypto Projects Never ‘fully Recover,’ Expert Warns
Security failures don’t just drain funds, they often destroy trust, leaving most hacked crypto projects unable to recover despite fixing the technical flaws.
Nearly four out of five crypto projects that suffer a major hack never fully regain their footing, according to Mitchell Amador, CEO of Web3 security platform Immunefi.
Amador told Cointelegraph that most protocols enter a state of paralysis the moment an exploit is discovered. “Most protocols are fundamentally unaware of the extent to which they are exposed to hacks, and are not operationally prepared for a major security incident,” he said.
According to Amador, the first hours after a breach are often the most damaging. Without a predefined incident plan, teams hesitate, debate next steps and underestimate how deep the compromise may go. “Decision-making slows as teams scramble to understand what happened, leading to improvization and delayed action,” he said, adding that this is frequently when additional losses occur.
Projects often avoid pausing smart contracts out of fear of reputational damage, while communication with users breaks down entirely. Amador warned that silence tends to amplify panic rather than contain it.
“Nearly 80% of projects that suffer a hack never fully recover,” he said. “The primary reason is not the initial loss of funds, but the breakdown of operations and trust during the response.”
Related: Truebit exploit exposes smart-contract flaw behind $26M token mint
Trust has become the most fragile asset in crypto. Alex Katz, CEO and co-founder of Web3 security firm Kerberus, said that even technically resolved incidents often mark the beginning of the end. “There are always exceptions, but in most cases a major exploit is a death sentence,” Katz said, noting that users leave, liquidity dries up and reputational damage becomes permanent.
While smart contract exploits once dominated headlines, recent losses increasingly stem from operational and human-layer failures. “Human error is clearly the weakest link in crypto security,” Katz said, explaining that most losses now come from users approving malicious transactions, interacting with fake interfaces, or unknowingly exposing their keys.
Earlier this month, a crypto user lost more than $282 million worth of Bitcoin (BTC) and Litecoin (LTC) in one of the largest social engineering attacks ever recorded in the crypto sector. The user was reportedly deceived by an attacker impersonating Trezor support, who tricked him int
Source: CoinTelegraph
