**80% of Hacked Crypto Projects Never Fully Recover, Expert Warns**
The cryptocurrency space has long been plagued by security breaches, with millions of dollars worth of funds lost due to hacking exploits. However, a grim reality is emerging: nearly four out of five crypto projects that suffer a major hack never fully regain their footing.
According to Mitchell Amador, CEO of Web3 security platform Immunefi, this is not just due to the initial loss of funds, but also the breakdown of operations and trust during the response. "The primary reason is not the initial loss of funds, but the breakdown of operations and trust during the response," he said.
Amador's warning comes as crypto-related hacks surged in 2025, with attackers targeting major platforms and individual wallets, driving total losses to $3.4 billion – the highest level since 2022. Just three incidents, including the $1.4 billion Bybit hack, accounted for 69% of all losses through early December.
But what exactly goes wrong when a project is hacked? According to Amador, the first hours after a breach are often the most damaging. Without a predefined incident plan, teams hesitate, debate next steps and underestimate how deep the compromise may go. "Decision-making slows as teams scramble to understand what happened, leading to improvisation and delayed action," he said.
This hesitation can lead to additional losses, as projects often avoid pausing smart contracts out of fear of reputational damage, while communication with users breaks down entirely. Amador warned that silence tends to amplify panic rather than contain it.
So what's the solution? According to Alex Katz, CEO and co-founder of Web3 security firm Kerberus, even technically resolved incidents often mark the beginning of the end for a project. "There are always exceptions, but in most cases a major exploit is a death sentence," he said, noting that users leave, liquidity dries up and reputational damage becomes permanent.
Katz emphasized that human error is clearly the weakest link in crypto security, with most losses now coming from users approving malicious transactions, interacting with fake interfaces or unknowingly exposing their keys. "It's not just about technical vulnerabilities," he said. "It's about how we respond to those vulnerabilities."
Recent high-profile hacks have highlighted the importance of response readiness. In December, a crypto user lost more than $282 million worth of Bitcoin and Litecoin in one of the largest social engineering attacks ever recorded in the crypto sector.
The attack was attributed to an attacker impersonating Trezor support, who tricked the user into revealing their hardware wallet seed phrase. Amador noted that advances in artificial intelligence have made such attacks more effective, allowing attackers to send thousands of tailored phishing messages per day.
Despite the grim statistics, crypto experts remain optimistic about the future. Amador believes smart contract security is improving faster than ever, driven by better development practices, stronger audits and more mature tooling. "I think 2026 will be the strongest year yet for smart contract security," he said, pointing to growing adoption of onchain monitoring, firewalling and threat intelligence.
However, Amador stressed that teams should act decisively and communicate immediately when an incident occurs, even if the full scope is unclear. He claimed pausing protocols early is far less damaging than allowing uncertainty to spiral.
As the cryptocurrency space continues to evolve, one thing is clear: response readiness will be key to surviving the next major hack.
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