Experts warn: 80% of crypto projects cannot recover after hacking, and lack of crisis management training is a fatal flaw.

In the cryptocurrency industry, the impact of security vulnerabilities is no longer just about financial losses. Many security experts point out that the true factor that often destroys crypto projects is the response errors and trust collapse after an attack. According to Mitchell Amador, CEO of Web3 security platform Immunefi, four-fifths of crypto projects that have suffered major hacker attacks ultimately cannot fully recover. Even if technical vulnerabilities are patched, they find it difficult to get back on track.

Amador stated in an interview that most protocols fall into operational paralysis the moment vulnerabilities are exposed. The reason is not the technical flaw itself but a lack of psychological preparedness and crisis management training for major security incidents. Many teams are unaware of the extent of their exposure to attack risks and lack comprehensive incident response procedures. He pointed out that the first few hours after an attack are usually the most destructive phase.

Crypto project teams lack crisis management awareness

When a crypto project is attacked, the team is often busy clarifying the situation and internal responsibilities, sometimes underestimating the severity of the incident, which leads to slow decision-making and missed opportunities to stop losses. Amador describes this crisis-unaware response as often being the key moment that causes additional fund outflows and customer trust to collapse.

Even more challenging, due to concerns about reputation damage, many projects choose to continue operating their smart contracts and avoid public explanations. This results in a communication vacuum with users. Amador emphasizes that silence does not calm market panic; it only allows rumors and uncertainty to spread, further accelerating user loss. He believes that nearly 80% of unrecoverable projects die not because of stolen funds but because of a total collapse of trust during the incident response.

Alex Katz, CEO and co-founder of Web3 security firm Kerberus, shares the same view. He bluntly states that in most cases, a major attack is almost equivalent to sentencing a project to death. Even if vulnerabilities are patched, user confidence is hard to restore, and liquidity depletion and brand reputation damage often become long-term and irreversible consequences. Katz points out that trust has become the most fragile and hardest asset to repair in the crypto industry.

Human factors are the main cause of security vulnerabilities

It is worth noting that recent security incidents are no longer solely concentrated on smart contracts themselves. While contract vulnerabilities remain a significant risk source, an increasing number of losses stem from operational management and human factors. Katz believes human error has become the weakest link in crypto security. User approvals of malicious transactions, connecting to fake interfaces, or unknowingly leaking private keys and seed phrases are all human errors.

Earlier this month, a shocking case occurred where a crypto user lost over $282 million in Bitcoin and Litecoin due to social engineering attacks. Reports indicate that the attacker impersonated Trezor customer service staff and successfully tricked the victim into handing over their private key seed phrase. The entire incident bypassed the security measures of smart contracts.

Overall data shows that hacker attacks related to cryptocurrencies surged significantly in 2025, with total losses reaching $3.4 billion, a new high since 2022. Among these, just three major incidents accounted for 69% of all losses in early December, including the $1.4 billion hack of Bybit. Amador pointed out that many of these attacks did not directly exploit contract vulnerabilities but targeted platform processes and personnel weaknesses.

AI-driven social engineering scams rampant

The rapid development of artificial intelligence has further empowered social engineering attacks. Amador states that attackers can now use AI to generate highly customized phishing messages on a large scale, sending thousands daily, greatly increasing success rates.

Contract vulnerabilities as the primary attack vector

A recent notable case involved the offline computation protocol Truebit, which suffered a $26 million attack. Blockchain security firm SlowMist’s post-attack analysis indicated that the attack stemmed from a logical flaw in the smart contract. Due to improper handling of integer overflow, the token minting price was incorrectly calculated as zero, allowing the attacker to almost costlessly mint大量 TRU tokens, ultimately draining the contract’s reserves and causing the token price to plummet by 99%.

SlowMist’s annual report shows that smart contract vulnerabilities remain the largest attack vector in 2025, with 56 incidents accounting for 30.5% of all attacks. Account leaks and compromised community accounts follow closely. On the other hand, CertiK reports that phishing scams in the crypto space caused investors to lose $722 million in 2025. Although this is a decrease from 2024, it remains the second-largest threat.

Despite the severe risks, Amador remains cautiously optimistic about the industry’s future. He believes that with more mature development processes, auditing systems, on-chain monitoring, and firewall tools, smart contract security is advancing rapidly. He even predicts that 2026 could be the strongest year for smart contract security development.

However, he also emphasizes that technological progress cannot replace response capabilities. The real key lies in whether project teams are well-prepared beforehand, able to act decisively and communicate promptly when incidents occur. Even if they do not have a complete picture initially, early suspension of protocols and honest communication with users often cost much less than allowing uncertainty to spread. For most crypto projects, the ability to prevent incidents in advance and maintain trust during crises is the critical dividing line between survival and failure.

This article Expert warns: 80% of crypto projects cannot recover after being hacked, lack of crisis management training is a fatal flaw was first published on Chain News ABMedia.