The Growing Risk of Social Engineering in Crypto and Its Impact on Security-First Firms

The cryptocurrency sector, once celebrated for its promise of decentralization and financial autonomy, has become a prime battleground for social engineering attacks. In 2025, these threats escalated dramatically, with North Korean hackers alone stealing $2.02 billion in crypto assets-a 51% increase from 2024-through sophisticated impersonation tactics and credential harvesting. Wallet compromises alone accounted for $1.71 billion in losses during the first half of the year, while phishing attacks represented 16.6% of total losses. These figures underscore a grim reality: the human element remains the weakest link in crypto security, and attackers are exploiting it with alarming precision.

The Human-Centric Threat Landscape

Social engineering attacks in crypto are no longer random or opportunistic. They are methodical, leveraging AI-generated phishing messages, deepfakes, and multi-channel deception to bypass even advanced technical safeguards. According to the Verizon Data Breach Investigations Report, 60% of breaches involve human error or manipulation. North Korean actors, in particular, have refined their strategies, embedding themselves as IT workers or recruiters in web3 firms to gain access to sensitive systems. Their operations are further amplified by a 45-day laundering cycle using Chinese-language services, demonstrating a level of sophistication that outpaces traditional cybersecurity measures.

The financial toll is staggering. Business Email Compromise (BEC) scams alone cost victims $2.77 billion in 2024, while phishing attacks accounted for 57% of data breaches involving external threat actors. These trends are not isolated to crypto but are particularly acute in the sector due to its decentralized nature and the high value of digital assets. As generative AI reduces the time required to craft convincing phishing messages to just five minutes, the attack surface expands exponentially.

Proactive Human-Centric Solutions: A New Frontier

The growing threat has spurred demand for human-centric security solutions-tools that address the psychological and behavioral vulnerabilities exploited by attackers. Two standout firms in this space are Adaptive Security and Doppel, both of which have raised significant capital in 2025 to scale their AI-driven platforms.

Adaptive Security recently secured $81 million in funding to expand its platform, which simulates real-world social engineering scenarios to train employees in recognizing and responding to attacks. By replicating tactics used by North Korean hackers and other threat actors, the platform builds organizational resilience against credential theft and phishing. This approach aligns with the FBI's 2024 data, which found that phishing accounted for 23% of all cybercrime complaints.

Doppel, meanwhile, has raised $70 million in Series C funding to enhance its AI-native platform, which focuses on real-time threat detection and mitigation. The company's agentic AI processes over 100 million signals daily, enabling rapid takedowns of phishing domains, fake NFTs, and wallet drainers across platforms like Telegram and Discord. Doppel's Human Risk Management initiatives also simulate attack scenarios, reducing vulnerabilities by up to 70% in pilot programs. For the crypto sector, where scams increased by 45% in 2023, Doppel's ability to neutralize multi-surface fraud is a critical differentiator.

Market Dynamics and Regulatory Tailwinds

The crypto security market is poised for explosive growth, driven by regulatory clarity and institutional adoption. The EU's Markets in Crypto-Assets (MiCA) Regulation and the U.S. GENIUS Act, both implemented in 2025, have established frameworks for stablecoin audits and anti-money laundering (AML) compliance. These regulations have not only increased trust in digital assets but also created a compliance-driven demand for security solutions.

Market forecasts predict the cryptography sector will grow from $13.16 billion in 2025 to $27.48 billion by 2030, with a compound annual growth rate (CAGR) of 15.78%. This growth is fueled by innovations like zero-knowledge proofs and fully homomorphic encryption, which align with the sector's need for privacy-preserving technologies. Additionally, the x402 protocol's adoption for secure micropayments has opened new avenues for machine-to-machine transactions, further expanding the security landscape.

Regulatory tailwinds are also reshaping procurement strategies. U.S. tariffs on encryption hardware have pushed firms to adopt subscription-based models and cloud-native solutions, creating opportunities for companies like Doppel and Adaptive Security to offer scalable, cost-effective services.

Investment Thesis: Securing the Future of Crypto

The convergence of rising threats, regulatory momentum, and technological innovation positions human-centric security firms as critical players in the crypto ecosystem. Adaptive Security and Doppel exemplify this trend, with their AI-driven platforms addressing the root causes of breaches while aligning with global compliance standards. For investors, these firms represent not just a hedge against risk but a direct bet on the sector's evolution toward operational resilience.

As the crypto market matures, the ability to protect human assets will become as vital as securing digital infrastructure. The companies leading this charge-those that combine behavioral science with cutting-edge AI-are likely to dominate the next phase of growth. In a world where trust is both the currency and the vulnerability, investing in human-centric security is no longer optional; it's a necessity.