Cryptocurrency-related thefts exploded in the first quarter of 2025, crossing the $1.77 billion mark in just three months, according to Finbold’s Q1 2025 Cryptocurrency Market Report. This sharp rise in stolen digital assets has set an alarming precedent for the year, sparking urgent discussions around security measures and regulatory oversight.
Finbold compiled the report using data from blockchain security firm SlowMist, revealing that crypto-related crimes continue to evolve in sophistication. A single attack in February accounted for the overwhelming bulk of the stolen assets, highlighting the fragility of current custodial and smart contract security systems.
The Bybit Cold Wallet Breach: $1.5 Billion Gone in a Flash
The most significant incident occurred in February when hackers infiltrated a cold wallet belonging to the cryptocurrency exchange Bybit. The attacker siphoned off nearly $1.5 billion in Ethereum, representing roughly 85% of the total value stolen during Q1. This theft alone exceeded the combined losses of the first half of 2024.
Despite Bybit’s reputation for security and the use of cold wallets—typically regarded as one of the safest storage methods—the attack exposed a critical flaw. Investigators suspect the breach involved insider knowledge or compromised credentials, though the exact method remains unclear. The aftermath led to temporary outages and prompted internal security audits across several major exchanges.
Libra Rug Pull Triggers Political Backlash
The second-largest incident didn’t involve a traditional hack but a full-blown scam. The Libra (LIBRA) project vanished with around $100 million in investor funds after its founders executed a coordinated rug pull. The fallout extended beyond financial losses, reaching into political territory.
Argentinian President Javier Milei had publicly endorsed the project during its early promotional phase, raising suspicions among industry observers. Although investigators found no direct involvement from Milei, his endorsement drew criticism and calls for greater accountability in political affiliations with crypto ventures.
Dave Portnoy, founder of Barstool Sports and an outspoken advocate of the token, reported personal losses exceeding $5 million. His public frustration reflected the broader sentiment among retail investors, many of whom entered the market based on celebrity and political endorsements.
Smart Contract Exploits Continue to Haunt Projects
Smaller but equally concerning breaches revealed recurring issues in smart contract management. In February, hackers exploited backdoor access at Hong Kong-based neobank Infini and stole $50 million. A former developer had retained administrative privileges in the platform’s contract, allowing the attacker to access and transfer funds. The hacker laundered the stolen amount using Tornado Cash, a decentralized mixer that remains a favorite tool for obfuscating blockchain trails.
March brought more incidents, including two contract-specific exploits:
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Abracadabra Money lost $13 million after an attacker manipulated vulnerabilities in the smart contract’s logic.
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zkLend, a zero-knowledge lending protocol, suffered a $9.6 million loss due to a rounding error exploit that allowed the extraction of over 3,600 ETH.
These events emphasized a critical need for comprehensive auditing and the elimination of hidden or poorly documented privileges in DeFi protocols.
True Losses Likely Much Higher
While $1.77 billion already paints a disturbing picture, Finbold’s report indicated that this figure might understate the actual scale. Many incidents remain unreported due to reputational risk or ongoing investigations. Blockchain forensic firms often discover additional losses long after the initial breach.
Jordan Major and Diana Paluteder, researchers at Finbold, cautioned readers that the total reflects only publicly known incidents. If thefts continue at the same pace, 2025 could witness over $7 billion in cryptocurrency losses, a record-breaking figure that would dwarf previous years. In comparison, quarterly losses stood at $452 million in 2023 and $1.38 billion in 2024.
Users Must Strengthen Their Own Defenses
As centralized platforms and DeFi protocols face rising threats, users must take proactive steps to secure their assets. The decentralized nature of blockchain eliminates central authority recovery options, so personal security becomes essential.
Trajan King, CFO of cryptocurrency shopping platform Zellix, offered six practical recommendations for safeguarding digital wallets:
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Use a VPN During Transactions
A virtual private network encrypts internet activity and masks IP addresses, limiting exposure to phishing attacks, DNS leaks, and malware. -
Enable Two-Factor Authentication (2FA)
Adding 2FA protects accounts by requiring a secondary code, even if attackers obtain login credentials. -
Secure the Seed Phrase Offline
Store recovery phrases in a physical, tamper-resistant medium—such as a metal wallet—to prevent digital access and theft. -
Utilize Cold Storage for Long-Term Holdings
Hardware wallets and cold storage solutions disconnect private keys from the internet, preventing online breaches. -
Select the Right Wallet Type
Choose hardware wallets for long-term savings and software wallets for daily use, ensuring each gets appropriate security updates. -
Keep Software and Devices Updated
Regular updates patch known vulnerabilities and improve resistance to emerging threats.
Conclusion: A Crucial Year for Crypto Security
The first quarter of 2025 has already exposed major cracks in cryptocurrency infrastructure. With over $1.77 billion stolen across high-profile breaches, rug pulls, and smart contract exploits, the industry faces a pivotal moment.
Exchanges, developers, and users must all prioritize security. Without drastic improvements in both centralized custodial practices and decentralized protocol architecture, thefts will continue to climb. If the current trend persists, 2025 could become the most damaging year in crypto history, both financially and reputationally.
As digital assets gain more traction globally, ensuring investor confidence through security and transparency will remain the cornerstone for sustainable growth in the cryptocurrency market.
