Crypto Security: A Broken System Focused on the Wrong Risks
The cryptocurrency industry has been plagued by security breaches, with investors losing a staggering $2.5 billion to hacks and fraud in the first half of 2025. Despite this, the industry’s response has been misguided, with a focus on security badges and audit reports that fail to address the root causes of these losses. Phishing attacks alone have resulted in losses of $410 million, yet the industry continues to prioritize the wrong solutions.
🚨 The Q2 + H1 2025 Hack3D report reveals that $2.47 billion was lost in the first half of the year, with $801 million lost in the second quarter alone. Phishing and compromised containers dominated the threat landscape.
Immerse yourself in the data 👇🧵 pic.twitter.com/sxa6agejgk
– Certik (@Certik) June 30, 2025
The Ineffective Approach to Security
Meanwhile, fraudsters continue to operate with impunity, using simple phishing tactics to steal millions. The “Vanilla Drainer” fraud service, for example, has reportedly stolen $5 million in just three weeks by tricking users into revealing their assets. This highlights the industry’s misguided focus on intelligent contract risks, rather than addressing the real threats posed by phishing and other forms of fraud.
Billions Spent on Security Theater
Despite the ineffectiveness of their approach, crypto projects continue to spend millions on security audits, which can cost between $8,000 and $150,000. However, these audits provide no guarantee of security and are often used as marketing trophies to reassure investors. The reality is that most security breaches are caused by phishing and other forms of fraud, which cannot be prevented by code audits alone.
Fraud Has Become Industrialized
Crypto fraud has become a major industry, with phishing-as-a-service platforms and fake apps that can be rented by fraudsters to scale their operations. This has created a thriving economy of fraud, with the weakest point in Web3 being the people themselves. Unlike traditional finance, where fraud is protected against by default, crypto users are left to shoulder the entire load, with no security net to protect them.
The Credibility Gap
The gap between perceived security and actual security in the crypto industry is toxic for adoption. Retail investors are hesitant to enter a market where security depends on perfect personal vigilance, while institutional actors see the same landscape and stay away, unwilling to suspend capital without adequate fraud controls. The security theater erodes trust, and each phishing attack extends the gap between the promises of crypto and the experience of its users.
The Path Forward: Real Solutions, Real Deployment
There are tools available that can reduce fraud, but they are not being used effectively. The mainstream adoption of crypto will never happen if every transaction feels like Russian roulette. Retail and institutional investors do not trust a system where an incorrect click can erase their funds. The industry must prioritize real defenses over security badges and audits, providing solutions that protect users on a scale. Until then, the losses will continue, and crypto adoption will remain out of reach.
Source: https://cryptonews.com/exclusives/crypto-security-is-broken-and-its-focused-on-the-wrong-risks/
