Cybercrime and Crypto Security Risks: A Guide to Investor Due Diligence in Blockchain Ventures

The blockchain industry's meteoric rise has been accompanied by a parallel surge in cyber threats, with 2025 marking a particularly volatile year for investors. According to a report by Hacken, the first half of 2025 saw over $3.1 billion lost to security breaches in blockchain-based projects, a staggering figure that eclipses the total losses of 2024The Hacken 2025 Half-Year Web3 Security Report Is Out^[1]. Access control exploits alone accounted for $1.83 billion in damages, while phishing schemes drained $600 million, and smart contract vulnerabilities led to $263 million in lossesThe Hacken 2025 Half-Year Web3 Security Report Is Out^[1]. These figures underscore a critical reality: for investors, cybersecurity is no longer a peripheral concern but a central pillar of due diligence.

The Evolving Threat Landscape

The sophistication of cyberattacks has outpaced many blockchain platforms' defenses. Chainalysis reported that $2.17 billion was stolen from cryptocurrency services in 2025 alone, with the DPRK's $1.5 billion hack of ByBit being the most significant incident2025 Crypto Crime Mid-Year Update - Chainalysis^[4]. Personal wallet compromises now account for 23.35% of stolen funds, reflecting a shift toward targeting individual users rather than institutional infrastructure2025 Crypto Crime Mid-Year Update - Chainalysis^[4]. Meanwhile, AI-related exploits surged by 1,025%, driven by insecure APIs and flawed inference modelsThe Hacken 2025 Half-Year Web3 Security Report Is Out^[1]. These trends highlight the need for investors to scrutinize not just the technology but also the human and operational elements of blockchain ventures.

A Framework for Cybersecurity Due Diligence

Investor due diligence in blockchain projects must adopt a multidimensional approach. A structured methodology, as outlined by Cisco, evaluates six key risk pillars: reputational, technical, financial, legal, cybersecurity, and auditabilityBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. For example, public blockchains are generally more secure due to their decentralized nature, whereas private or consortium blockchains introduce risks tied to centralized controlBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. Smart contract audits—exemplified by the Poly Network hack, which exposed vulnerabilities in cross-chain protocols—should be a non-negotiable stepBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2].

Technical due diligence also requires assessing the quality of source code, historical vulnerabilities, and governance structuresBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. Projects with transparent, open-source codebases and active community engagement are often better positioned to address security flaws. Financial advisors must further evaluate a project's white paper, blockchain architecture, and storage solutions, ensuring robust measures like multi-factor authentication are in placeBlockchain Due Diligence & Risk Assessment^[3].

Case Studies: Lessons from the Frontlines

Real-world examples illustrate the consequences of inadequate due diligence. In 2024, Applied Blockchain's risk assessment of the Terra Luna protocol identified critical architectural flaws, leading to a recommendation against investmentBlockchain Due Diligence & Risk Assessment^[3]. This proved prescient when Terra Luna collapsed in 2025, erasing $40 billion in value. Conversely, rigorous audits of Ethereum Classic's network helped mitigate the impact of a 51% attack by enabling rapid response protocolsBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. These cases emphasize the value of expert-led risk assessments in uncovering hidden vulnerabilities.

Mitigation Strategies and Industry Responses

The industry is adapting to these threats through frameworks like Zero Trust Architecture (ZTA), which mandates continuous verification of transactions and node operatorsBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. Platforms such as Polygon and Fedrok AG are integrating ZTA to bolster security. Regulatory frameworks like the EU's Markets in Crypto-Assets (MiCA) and evolving AML standards also serve as enablers, requiring transaction monitoring and identity verificationBlockchain Security In 2025: How The Industry Is Tackling Trust and Compliance Threats^[2]. However, compliance alone is insufficient; investors must prioritize proactive measures such as supply chain security audits and threat modeling.

Conclusion: Vigilance as a Competitive Advantage

As cyber threats evolve, so too must investor strategies. The 2025 data reveals a landscape where even the most promising blockchain projects can falter without robust security protocols. By adopting frameworks that combine technical rigor, regulatory compliance, and continuous monitoring, investors can mitigate risks while capitalizing on blockchain's transformative potential. In this high-stakes environment, due diligence is not merely a checkbox—it is a lifeline.