Malicious actors stole more than $750 million in various crypto-related hacks and scams during the third quarter, pushing total losses for the year to over $1.9 billion, according to CertiK’s quarterly Hack3d security report.

The losses were incurred in 155 separate incidents, showing a 9.5% rise in stolen funds compared to the previous quarter. However, there were 27 fewer incidents than in the second quarter.

According to the report, three major events were responsible for most of the funds stolen during the quarter. Two of the largest incidents were a $238 million phishing attack targeting a Bitcoin whale and a $231 million hack of India-based centralized exchange WazirX. The third largest incident involved an individual investor who fell victim to a phishing scam that resulted in a $55.4 million loss.

Meanwhile, roughly $30.9 million was recovered across nine incidents, lowering the adjusted net losses to around $722 million for the quarter.

Phishing remains a concern

Phishing attacks and private key compromises were the most dominant attack methods used by malicious actors during the third quarter.

Phishing alone caused losses exceeding $343 million in 65 cases. Typically, these scams involve attackers posing as trusted entities to deceive victims into sharing sensitive information like passwords.

Private key compromise ranked second, with over $324 million lost across 10 cases. In these scenarios, attackers gain control of private keys, allowing them to transfer funds without needing further authentication.

Other notable vulnerabilities involved code flaws, reentrancy bugs, price manipulation, and fundraising-related scams, among others.

Ethereum suffered most losses

Across blockchain networks, Ethereum saw the most security breaches, with 86 hacks and scams resulting in losses of over $387 million. The Bitcoin network followed, with $238 million stolen in a single phishing incident.

CertiK explained that the two top blockchain networks were the most targeted because of their “high transaction volume, large userbase, and TVL.”

Meanwhile, multi-chain platforms also suffered significant losses of around $90 million, while other blockchain networks like Binance Smart Chain (BSC), Cosmos, Scroll, Solana, Base, Blast, and Optimism accounted for the remaining incidents.

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The following is a guest post by Vincent Maliepaard, Marketing Director at IntoTheBlock.

When you first hear about Bitcoin staking, you might assume there’s a mistake, given Bitcoin’s Proof of Work (PoW) mechanism. However, Bitcoin staking is indeed a reality, with thousands of addresses participating and generating returns on their assets. Here’s what you need to know.

Bitcoin Staking Explained

Staking traditionally refers to the process where holders of a cryptocurrency lock up their funds to participate in network operations, such as transaction validation on Proof of Stake (PoS) blockchains. Bitcoin, however, operates on a PoW consensus mechanism, which does not natively support staking. This dynamic has changed with the introduction of Bitcoin staking through platforms offering Bitcoin-based Liquid Staking Tokens (LSTs). These platforms enable BTC holders to engage in staking activities indirectly.

EigenLayer, Babylon, and AVS’s

On Ethereum, the concept of “restaking” was introduced in 2023 with EigenLayer, which gained significant traction by mid-2024, reaching a total value locked (TVL) of over $20 billion in June. Normally, staking ETH helps secure the Ethereum network, rewarding stakers in return. EigenLayer extends this concept by allowing users to “restake” their ETH to secure additional services, earning extra rewards.

Initially coined as Active Validated Services (AVS) on Eigenlayer, these applications by different terms depending on their associated (re)staking platform. AVSs are applications or services that can be secured with restaked ETH. This concept is now being extended to the Bitcoin blockchain and BTC-pegged tokens. Babylon is leading this effort, building an architecture that allows applications to leverage Bitcoin’s crypto-economic security. Meanwhile, on the Ethereum side, Symbiotic and soon Eigenlayer are restaking protocols accepting tokens such as Wrapped Bitcoin (WBTC) as collateral to support applications that seek to utilize these assets for enhanced security.

Understanding Bitcoin Staking

In Bitcoin staking, users deposit their BTC into a staking protocol and receive Liquid Staking Tokens (LSTs) in return. These LSTs represent the staked BTC but often offer enhanced liquidity and other functionalities. This allows participants to engage in DeFi activities without sacrificing staking rewards.

Currently, the most popular Bitcoin LST is LBTC, originating from the Lombard protocol. Here’s a breakdown of how it works:

1. How LBTC is Created: To mint LBTC, users send their BTC to special addresses linked to the Babylon protocol. This action creates LBTC on Ethereum, acting as a placeholder for the Bitcoin you sent.
2. What Happens to the BTC: The actual BTC sent is held securely within Babylon protocol’s contracts. At present, this BTC isn’t being utilized or accessible, but it remains safely stored.
3. Rewards for Depositors: While the BTC is held in reserve, depositors are rewarded with points from both the Babylon and Lombard systems as an incentive for their participation.
4. The Future Plan: The goal is to eventually use the BTC held by Babylon’s contracts to secure a broader ecosystem. This would involve allowing different apps and chains to utilize this BTC to secure their networks while maintaining a connection to the main Bitcoin network.

Leading Protocols in Bitcoin Staking

Several protocols have emerged as frontrunners in the Bitcoin staking arena:

• Lombard Staked BTC (LBTC): As a leader in this market, LBTC has seen its market cap grow significantly, now sitting at $300 million with over 3,000 holders.
• UniBTC: UnitBTC secured a significant number of holders early on. While LBTC has surpassed it, it still ranks second with roughly 1000 holders.
• Swell BTC (SWBTC): SWBTC had a strong start and seemed likely to surpass uniBTC. However, growth has slowed down and it currently ranks third with around 440 holders.

Is Bitcoin Staking the Future of Bitcoin yield?

Bitcoin staking has seen a strong start, with thousands of holders already earning points through leading protocols. Currently, staked Bitcoin represents 3.75% of all wrapped Bitcoin, indicating there is still plenty of room for growth in the coming months.

The concept is promising, but its long-term success will depend on whether the economics of staking make sense beyond the initial point rewards. The key factor will be the development of services built on top of these protocols. If a robust ecosystem of services develops, Bitcoin staking could become one of the most attractive yield opportunities for Bitcoin holders.

MicroStrategy, in a Sept. 20 filing with the US SEC, declared the acquisition of 7,420 BTC for $458.2 million at an average price of $61,750 per Bitcoin between Sept. 13 and Sept. 19.

According to the SEC filing, the firm used proceeds from its recent senior notes offering, which raised $1.01 billion, to fund the purchase. Originally targeting $700 million in debt notes, MicroStrategy increased the offering to $875 million due to high demand.

The acquisition follows the firm’s recent purchase of approximately 18,300 BTC for over $1 billion, financed via selling more than 8 million company shares.

These acquisitions have brought the company’s total Bitcoin holdings to 252,220 BTC, purchased for a combined $9.90 billion at an average price of $39,266 per Bitcoin, including fees and expenses.

Data from SaylorTracker indicates that MicroStrategy’s total Bitcoin holdings are currently valued at $15.84 billion, reflecting an unrealized profit of roughly $6 billion.

The Michael Saylor-led company also reported a quarterly Bitcoin yield of 5.1%, with a year-to-date yield of 17.8%.

Following the news, MSTR was up 0.18% as of press time, according to Yahoo Finance data.

Growing interest in MicroStrategy ETFs

MicroStrategy’s ongoing Bitcoin acquisitions coincide with a surge in interest in the firm’s exchange-traded funds (ETFs).

According to Bloomberg Intelligence ETF analyst Eric Balchunas, two recently launched leveraged MicroStrategy ETFs are among the most volatile in US history and are attracting significant attention.

Balchunas noted that the long MicroStrategy ETF recorded $2 million in volume on its first day and was on track to reach $10 million by midday on Sept. 19. He highlighted the fund’s early successes compared to typical ETF launches and noted that “only like 1-2% of ETF launches see this kind of volume this early.”

Speaking on these impressive numbers, Greg King, the founder of Osprey Funds, stated that the ETFs were “one of the most leveraged ways to play BTC” in the current market.

Notably, this isn’t the first leveraged MicroStrategy fund. Defiance ETFs launched a 1.75x MicroStrategy ETF on Aug. 15, which recently surpassed $200 million in assets.

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Bitcoin price dipped to a daily low of $62,586 after briefly touching the $64,000 mark for the first time this month.

According to CryptoSlate data, the flagship digital asset has since recovered the dip and was trading at $63,127 as of press time.

Nevertheless, the current price reflects a notable recovery from its dip to under $53,000 earlier this month. As of Sept. 20, Bitcoin was up 7.5% over the past week and 3.21% over the past 30 days.

Inflows hit $150 million

Bitcoin’s positive price movement coincides with a significant inflow into spot Bitcoin exchange-traded funds (ETFs).

According to Farside Investors data, Bitcoin ETFs recorded a $158.3 million inflow on Sept. 19, marking a sharp reversal from the $52.7 million outflow recorded on the previous day.

The Ark 21Shares Bitcoin ETF (ARKB) and Fidelity Wise Origin Bitcoin Fund (FBTC) led the inflow. ARKB saw $81.1 million in inflows, followed by $49.9 million for Fidelity’s FBTC. Bitwise’s BITB ETF reported $10.4 million in inflows, while Grayscale’s BTC Mini-Trust and Franklin Templeton’s EZBC received $9.5 million and $7.4 million, respectively.

Notably, BlackRock’s IBIT had its third consecutive day of zero flows.

Meanwhile, Grayscale’s flagship Bitcoin product has seen a reduction in outflows. In recent weeks, outflows slowed to around $4.6 million on Sept. 13, with minimal activity since. Grayscale’s BTC Mini-Trust, which offers lower fees, appears to mitigate further outflows from the product.

Bloomberg Senior ETF Analyst Eric Balchunas highlighted the significance of the recent inflows, noting that Bitcoin ETFs have set a new high of $17.7 billion year-to-date.

Furthermore, Balchunas compared Bitcoin ETFs to gold ETFs, pointing out that gold ETFs account for 1% of the total gold market cap. In contrast, Bitcoin ETFs already make up 5% of Bitcoin’s total market cap despite existing for only nine months, compared to 22 years for gold ETFs.

He added:

“Even if we just use net flows: $17.7 billion is like 1.5% of BTC cap. [It is] so ahead of gold ETF impact (and those assets include a lot of price appreciation) in 9 months flat.”

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Dormant Bitcoin miner wallets have resurfaced after roughly 15 years of inactivity to move 250 BTC, valued at over $15 million at current prices.

On Sept. 20, Lookonchain reported that five miner wallets, each of which received 50 Bitcoin as block rewards in 2009, were moving funds for the the first time in more than a decade.

On-chain data showed that the wallets received these mining rewards in early 2009 — a period that Bitcoin enthusiasts often refer to as the Satoshi era.

With Bitcoin presently trading at more than $63,000, the miners have held for an astounding gain of more than 1,000,000% in the value of the top digital asset, which was only worth a few cents at the time.

Who owns these wallets?

The movement of funds from old wallets, particularly from the Satoshi era, always stirs curiosity in the crypto community. The term “Satoshi era” refers to the period when Bitcoin’s pseudonymous creator, Satoshi Nakamoto, was still active, communicating online through forums between late 2009 and 2011.

Nakamoto mined the first block in January 2009. So, considering these wallets received their rewards shortly after Bitcoin’s launch, they likely belonged to individuals involved in its early days.

Some community members speculated that these early wallets could be connected to Nakamoto. However, since all five wallets moved funds on the same day, after more than a decade of silence, it’s plausible they belong to one or several related parties.

How many dormant wallets are left?

A Fortune report claimed that 1.75 million Bitcoin wallets have been inactive for over a decade. Many of these wallets hold significant amounts of BTC — purchased when prices were in the double digits— which are now worth millions.

These dormant wallets hold approximately 1,798,681 Bitcoin, currently valued at more than $120 billion.

In recent years, several Satoshi-era wallets have been activated, transferring BTC to new addresses. Some even moved funds to crypto exchanges, suggesting the owners may be seeking profits after nearly a decade of holding.

MicroStrategy has increased its convertible debt offering to $875 million from $700 million to purchase more Bitcoin, according to a Sept. 18 statement.

The Virginia-based company aims to raise these funds by selling convertible senior notes with an interest rate of 0.625% annually. These unsecured senior obligations will be available to institutional investors in a private sale. The notes are set to mature in September 2028.

The company also revealed plans to offer initial buyers an option to purchase an additional $135 million in notes within 13 days of the first issuance.

MicroStrategy estimates that the net proceeds from this sale will reach approximately $864.1 million. The firm plans to redeem $500 million of its 6.125% Senior Secured Notes due in 2028 with part of the proceeds, while the remaining funds will be used to buy more Bitcoin and for general corporate purposes.

If initial buyers exercise the option to purchase more notes, proceeds could reach $997.4 million.

The notes’ conversion rate is set at 5.4589 shares of MicroStrategy class A common stock per $1,000 principal amount, which represents a 40% premium.

This move follows MicroStrategy’s recent purchase of 18,300 Bitcoin for $1.11 billion. The firm’s total Bitcoin holdings now stand at 244,800 BTC, worth $9.45 billion, or $38,585 per Bitcoin. MicroStrategy reported that its BTC holdings have seen a 4.4% quarterly-to-date yield and a 17% year-to-date yield.

Following this news, MicroStrategy’s stock increased by 2% in intraday trading to $133.23 per share. The stock has surged more than 110% over the past year, according to Yahoo Finance data.

‘Hot Sauce’

MicroStrategy’s latest move coincides with REX Shares and Tuttle Capital Management launching new exchange-traded funds (ETFs) that offer 200% leveraged exposure and -200% inverse exposure to the company’s MSTR shares daily price movements.

According to a Sept. 18 announcement, the T-REX 2X Long MSTR Daily Target ETF (MSTU) and T-REX 2X Inverse MSTR Daily Target ETF (MSTZ) will trade on the Cboe BZX Exchange.

Bloomberg senior ETF analyst Eric Balchunas commented that REX and Tuttle “re-broke the volatility barrier” with these ETFs, estimating their volatility to be about 15 times higher than that of the S&P 500.

Balchunas added that the new ETFs will likely outperform Defiance’s 1.75x leveraged MSTR ETF, which has already seen strong demand.

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CleanSpark has intensified its Bitcoin mining efforts by acquiring two new sites near Clinton, Mississippi.

On Sept. 17, the Bitcoin miner revealed that the new sites were purchased for $5.775 million and can support 16.5 megawatts.

According to the firm, the locations will house S21 Pro miners, providing a combined operating hash rate of roughly one exahash per second (EH/s). It added that it would receive the site turnkey-ready by Dec. 1. With these additions, the company’s data center capacity in Mississippi will grow to 60.5 MW.

Over the past week, CleanSpark’s operational capacity has surged by 38%, reaching 211.5 MW. This expansion supports the company’s goal of achieving a 37 EH/s capacity by the end of 2024 and 50 EH/s by 2025, according to CEO Zach Bradford.

In a separate update, CleanSpark confirmed the closure of its 45 MW site in Wyoming on Sept. 11, 2024. Once operational, this facility is projected to contribute an additional 3 EH/s. The site will feature immersion-cooled data centers supporting the latest S21 immersion XP miners.

Meanwhile, the latest news comes less than a week after CleanSpark announced it was purchasing seven mining facilities and associated land in Tennessee for $27.5 million.

Bitcoin mining focus

Mathew Schultz, CleanSpark’s co-founder, explained that these purchases demonstrated the firm’s continued focus on Bitcoin mining in contrast to rivals diversifying into artificial intelligence (AI).

According to Schultz, while many miners are shifting to AI or using resources for alternative tokens, CleanSpark is focused on expanding its Bitcoin mining capacity.

Over the past months, AI-focused miners have expanded their data center infrastructure to tap into the opportunities in the rapidly growing AI sector. Notably, a Bernstein report noted that investors have a stronger conviction in this class of miners due to their diversified revenue stream and potential upside.

However, Schultz appears unbothered by this, noting that the rising demand for Bitcoin and the firm’s strategy of adding megawatts and efficient exahash capacity could help it fulfill its promises.

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