Recent findings from blockchain security experts have revealed that fraudulent activity in the crypto space is maturing into an industrial scale. This means that bad actors, hackers, and fraudsters are increasingly executing sophisticated social engineering operations to drain victims’ wallets.
A 2025 Web3 Security and Fraud Report from the blockchain security firm Cyvers revealed a sharp rise in both crypto fraud and on-chain security incidents last year. The industry recorded 108 incidents related to fraud or security threats.
The State of Crypto Fraud in 2025
According to Cyvers, roughly $16 billion in crypto assets were linked to fraudulent activity in 2025. This activity spanned at least 140 crypto exchanges and trading venues, reaching an unprecedented scale across wallets, payment providers, and banking rails. All major exchanges saw a significant portion of their clients defrauded at least once.
Cyvers’ security systems detected more than 4.2 million fraudulent transactions across 780,000 addresses, on roughly 19,000 active fraud networks. These fraudulent flows were heavily concentrated in assets like Tether (USDT), ether (ETH), and USD Coin (USDC).
The blockchain security platform found that authorized fraud, especially pig butchering schemes, was the most organized and persistent threat. Bad actors in these networks used long-term social engineering tactics and fake investment platforms to deceive victims into draining their wallets.
On-chain Threats Are Evolving
While crypto fraud was the biggest driver for losses last year, security incidents also contributed significantly. The crypto industry lost $2.5 billion to hacks in 2025, up from $2.36 billion in 2024 and $1.69 billion in 2023.
Most of the financial damage (over $2.2 billion in losses) recorded via security incidents came from large-scale access control attacks – compromised keys, permissions, and human error. About $292 million was lost to smart contract and code vulnerabilities.
It is worth mentioning that the largest crypto theft in history occurred last year, the $1.5 billion incident on the crypto exchange Bybit. Cyvers said the attack, which was facilitated through a supply-chain compromise and legitimate signatures, did not initially appear to be a hack. Market experts predict that this could be the future of attacks – on-chain threats that look normal at first glance.
Meanwhile, Ethereum was the primary target, accounting for 70% of all funds lost across 33 large incidents. Other networks, such as BNB Chain, Bitcoin, and Sui, also witnessed high-impact single events.