Crypto Projects Hit By Major Hacks Struggle To Recover And Rebuild Trust

TLDR

• Around 80% of hacked crypto projects never fully recover after security breaches.
• Experts say trust loss and slow crisis response cause lasting damage post-hack.
• Most crypto exploits now involve human error, not smart contract flaws.
• 2025 saw $3.4 billion lost in hacks, the highest amount since 2022.

A growing number of crypto projects are failing to recover after major security breaches, not just due to financial losses but because of broken trust and poor crisis management. Experts warn that nearly 80% of hacked projects never return to normal operations. As attacks shift from code flaws to human errors, the lack of quick response and clear communication often turns an exploit into a lasting failure.

80% of Hacked Crypto Projects Never Fully Recover, Expert Warns

Nearly 80% of crypto projects that suffer a major hack are unable to return to their previous state, according to Mitchell Amador, CEO of Web3 security firm Immunefi. Speaking with Cointelegraph, he said the key issue is not just the financial loss, but the collapse of user trust and slow operational response during a crisis.

Amador emphasized that many protocols do not have a clear incident response plan. This often results in hesitation and disorganized actions in the first few hours of an exploit. According to him, this delay allows additional losses and damages the project’s reputation further.

Lack of Preparedness and Communication

Amador stated that most protocols are unaware of how exposed they are to security breaches. When an attack happens, decision-making becomes slow, and teams begin to improvise under pressure. “Decision-making slows as teams scramble to understand what happened,” he explained.

He also noted that many teams fear pausing their smart contracts due to reputational concerns, but the result is often worse. Communication with users breaks down, and silence leads to increased panic. Amador warned that the initial technical fix is not enough to regain user trust or restore the protocol’s full health.

Human Error and AI-Driven Attacks on the Rise

Alex Katz, CEO of Kerberus, echoed Amador’s concerns. He said, “There are always exceptions, but in most cases a major exploit is a death sentence.” Katz pointed out that smart contract vulnerabilities are no longer the main cause of hacks. Most recent losses are due to human mistakes such as approving fake transactions or interacting with phishing sites.

One of the biggest examples happened earlier this month when a user lost over $282 million in Bitcoin and Litecoin. The attacker used a social engineering method by pretending to be Trezor support and got access to the victim’s seed phrase.

Amador added that advanced artificial intelligence tools have made such attacks faster and more scalable. Attackers can now send thousands of personalized phishing messages in a short time.

Crypto Losses Hit $3.4 Billion in 2025

Crypto-related hacks surged again in 2025, with a total of $3.4 billion lost across various platforms. This was the highest figure since 2022. According to Chainalysis, three major incidents made up nearly 69 percent of these losses. One of them was the $1.4 billion attack on Bybit, which became the largest single hack of the year.

Amador said attackers have started bypassing smart contracts completely and are now focusing on operational weaknesses. This shift has raised concerns about the human side of crypto security.

Improving Security But Crisis Response Still Weak

While technical tools and security audits are improving, the biggest challenge is still response readiness. Amador believes 2026 could be the strongest year for smart contract safety, with better tooling, monitoring, and firewalls. But he stressed that without fast and clear communication during a crisis, the damage becomes harder to fix.

He explained that early pausing of a protocol is often better than letting confusion and fear grow. “The primary reason is not the initial loss of funds, but the breakdown of operations and trust during the response,” Amador said.

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