Recent studies by blockchain security specialists indicate that fraudulent behavior within the cryptocurrency sector appears to be escalating towards an industrial scale. This shift suggests that criminals are executing increasingly complex social engineering tactics designed to empty victims’ wallets.

A 2025 Web3 Security and Fraud Report from Cyvers pointed to a notable increase in crypto fraud and on-chain security breaches last year, documenting 108 instances linked to fraudulent and security threats.

The State of Crypto Fraud in 2025

According to Cyvers, approximately $16 billion in crypto assets were connected to fraudulent activities in 2025. This encompassed at least 140 cryptocurrency exchanges and trading platforms, affecting a staggering number of wallets, payment processors, and banking services, with almost all major exchanges reporting that clients were defrauded at least once.

The company’s security solutions identified over 4.2 million fraudulent transactions across 780,000 addresses, which were part of about 19,000 active fraud networks. Fraudulent activities predominantly targeted assets such as Tether (USDT), ether (ETH), and USD Coin (USDC).

Cyvers’s analysis highlighted that authorized fraud, mainly through pig butchering schemes, was the most organized and ongoing threat. Criminal organizations employed extended social engineering methods and fraudulent investment platforms to mislead victims into depleting their wallets.

On-chain Threats Are Evolving

While crypto fraud represented the primary loss generator last year, security breaches also had a significant impact. The cryptocurrency industry sustained losses of $2.5 billion due to hacks in 2025, an increase from the $2.36 billion lost in 2024 and $1.69 billion in 2023.

The bulk of these financial losses (exceeding $2.2 billion) were due to large-scale access control breaches involving compromised keys, permissions, and human error, with around $292 million attributed to smart contract and code flaws.

Notably, the largest cryptocurrency theft ever occurred last year, totaling $1.5 billion on the exchange Bybit. Cyvers asserted that this attack, orchestrated through a supply-chain compromise and legitimate signatures, did not initially seem like a hack. Market analysts warn that such subtle attacks could define the future of on-chain threats.

Ethereum has been the primary target, with 70% of all funds lost in 33 significant incidents. Other networks like BNB Chain, Bitcoin, and Sui have also faced considerable singular events.