Immunefi CEO Hints Why Most Crypto Projects Fail After Hack

Security breaches are one of the biggest risks in the crypto industry today. While a few projects recover after an attack, most do not.

Mitchell Amador, CEO of Web3 security firm Immunefi, says nearly four out of five projects hit by major hacks never fully recover. The harm goes beyond lost funds, damaging trust, daily operations, and long-term survival.

Poor Incident Response Worsens Crypto Hack Damage

When an exploit is found, many crypto projects quickly fall into chaos. Amador said most teams do not realize how vulnerable they are. 

When a serious attack happens, they are unprepared and often freeze their systems. Without a clear response plan, teams delay action, which gives attackers more time to do harm.

Fear of damaging their reputation also stops some teams from pausing smart contracts, even when it could reduce losses. Amador said most projects fail after hacks not because of the money lost, but because trust and operations break down during the response. Once trust is lost, it is very hard to win back.

Human Error Emerges as Crypto’s Biggest Security Risk

Trust is the most fragile part of the crypto space. Alex Katz, CEO and co-founder of Web3 security firm Kerberus, says that even when teams fix the technical problem, the damage often lasts. 

Users leave, liquidity dries up, and reputations rarely recover. For many projects, a major hack signals the beginning of the end. Katz explained that attacks are also changing. While smart contract bugs once caused most hacks, human error is now the biggest weakness. 

Many losses happen when users approve malicious transactions, visit fake websites, or expose their private keys. This was seen earlier this month when a crypto user lost over $282 in Bitcoin (BTC) and Litecoin (LTC). 

The attacker reportedly pretended to be customer support and tricked the victim into sharing a hardware wallet recovery phrase. 

Crypto Hacks Surge in 2025 as Losses Hit $3.4 Billion

Crypto hacks rose sharply in 2025, with total losses reaching $3.4 billion, the highest since 2022. Just three hacks, including the $1.4 billion Bybit breach, made up more than two-thirds of those losses by early December.

Many attacks did not target smart contracts but instead exploited operational gaps, with artificial intelligence (AI) making social engineering scams more effective. Attackers can now send thousands of convincing phishing messages daily, greatly increasing success rates.

Even so, experts see improvement. Smart contract security is improving because developers now use better coding standards, stronger audits, and more advanced tools. 

Experts expect 2026 to be the strongest year yet as onchain monitoring, security firewalls, and real-time threat detection become more common. Hacks may continue, but stronger defenses and faster responses will likely decide which projects survive.