The crypto market lost $1.67 billion to hacks and scams in the first quarter of 2024

The crypto market lost $1.67 billion to hacks and scams in the first quarter of 2024, says a CertiK report. The Bybit hack became the biggest hack

The crypto market experienced losses of $1.67 billion in the first quarter of 2024 due to hacks and scams, according to a CertiK report. The Bybit hack was the largest, followed by the Phemex heist, and the Infini exploit.

These hacks represent a 300% surge from the previous quarter and encompass various types of attacks, including social engineering, phishing, contract manipulation, private key breaches, and more.

These occurrences arrive at a time when major institutions are showing increasing interest in digital assets, launching ETFs and other financial products.

There’s a pressing need to eliminate the negative aspects of the crypto market and promote sustainable offerings.

One potential solution lies in embedding ethical finance principles within crypto projects.

Projects like Caiz are already offering ethically compliant products that prioritize security and transparency, ultimately leading to greater crypto adoption.

Let’s delve into how.

Crypto’s Ethics Problem: Can We Fix It?

The crypto market is rife with scam and shady projects. It’s difficult to keep track of the unethical schemes that crypto facilitates and scams it suffers from.

Did you hear about the zkLEND hacker who stole $9.6 million in ETH? The hacker tried to use Tornado Cash to sell the ETH and ended up losing all of it to a phishing site disguised as Tornado Cash.

Despite enhanced security protocols and the global regulatory movement towards crypto, the situation remains largely unchanged. Bad actors continue to evolve, and risks persist across the ecosystem.

The negatives outweigh the positives.

There’s been a lot of discussion about whether crypto, as a technology, can actually lead to ethical or positive outcomes for society.

Several debates rage around whether cryptocurrency as a technology application supports any ethical or moral outcomes for the society at large. The other considerations that back the viability of the current crypto projects are pragmatism or politics.

By pragmatism we mean whether a project is capable of creating any real world utility or economic value. There are blockchain ecosystems like Ethereum, Bitcoin, Cardano, Avalanche, Chia, Caiz, Algorand, etc., that cater to real world use cases.

Bitcoin powers peer-peer cross border transactions, pulling third-world citizens away from the unstable home countries and granting financial inclusion. Bitcoin and many other payment networks like Caiz Finance may be the answer for banking the $2 billion unbanked population, including Muslims.

Ethereum, Cardano, Algorand, and other projects have embraced proof of stake and other energy efficient mechanisms and are pushing for real world use cases via RWAs, DePIN, DeFAI, and other crypto narratives.

However, despite this innovation, many crypto projects, especially newer ones aren’t inherently ethically sound. Even some of the most secure and immutable currencies, like Bitcoin, can be misused for illicit purposes such as money laundering or terror financing. Other major blockchains, like Ethereum, have also become hotspots for hacks and scams — despite their promises of decentralization. In Q1, 98 of the 197 hacks occurred on Ethereum alone.

Blockchain technology and its applications such as cryptocurrencies are neutral technologies, which if in the wrong hands, can wreak havoc.

So what’s the way out?

The answer may lie in ethical finance. By embedding crypto projects’ code with ethical finance principles and regulating the sources and use of cryptocurrencies and their platforms via additional compliance layers, there’s a high possibility that innocent investors are saved and more people adopt crypto as a way of life.

How Ethical Finance Can Bring Morality Into Crypto

Many cryptocurrencies today are often criticized for contributing to illicit activity, consumer fraud, and environmental harm. These challenges could potentially be mitigated if crypto projects adopted ethical principles in their operations.

The Emerald Handbook of Ethical Finance and Corporate Social Responsibility defines Ethical Finance as finance that considers environmental, social, and governance (ESG) aspects influencing a borrower and/or its possessions. Ethical finance requires that money gets earned through good means and gets spent on good means. Ethical finance lays stress on moral and social responsibility. It aims to promote inclusion, trust, integrity, fairness, and honesty.

Islamic finance goes a step ahead and integrates Sharia-compliant practices such as prohibition of interest-based financial activities, gambling, manipulation, etc.

Most crypto projects are unsustainable today, given their short-term money-making goals and speculative practices. The 2020-2021 bull cycle saw a 72% failure rate among the projects getting launched during that period.

A Forbes article says, “Crypto is much more than just a new tool-kit or software architecture. It embodies a mindset, a worldview, an obsession. For some, nearly a religion. For others, a kind of nemesis.”

If crypto platforms adopt a mindset or worldview that’s based on ethical finance, it would automatically prioritize its moral and social responsibility