In a recent study conducted by the Moscow-based cyber security firm Group-IB, it was revealed that ICO funded projects are hot targets for cyber criminals, and that on average these projects are enduring 100 cyber attacks a month.
Group-IB analyzed attacks on 450 ICO projects since 2017. According to the published report, the frequency of the attempted attacks increased by a factor of ten over this period.
As quoted by Reuters, Group-IB’s director of public client services Ruslan Yusufov said: “Most attacks use traditional and well-proven techniques, which are also very effective for stealing cryptocurrencies.”
“Lots of projects underestimate cybersecurity risks, which leads to an avalanche of threats and successful thefts,” he added.
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Group IB also collaborated with Ernst & Young to conduct another study on the ICO market. According to this report, more than 10% of the $3.7 billion raised through ICO are either lost or stolen by hackers.
The studies also pointed out that most of the hackers use so-called phishing attacks, in which they spoof emails and websites as bait, and thus steal sensitive information like passwords. Many scammers also put up fake websites of an original project, tweaking sensitive details like wallet address. Thus, raised funds often end up on the scammer’s account.
The timing of these reports is crucial as more and more ICOs are attracting investors who expect huge returns in a short period of time. Although ICOs have become a popular option for raising funds, ill-equipped teams often ignore the risk of cyber attacks.
The ICO market is so vulnerable that with the recent rumors regarding the Telegram ICO, a number of fake sites were set up to lure early investors into purchasing malicious coins. Finally, the company CEO officially announced that no website for fundraising has been opened yet.
Fraudsters have even faked entire ICOs – as in the Benebit multi-million dollar scam, for example.