January Crypto Hacks: $86M in Protocol Breaches as Phishing Tops $300M
January 2026 saw 16 crypto hacks that together cost protocols $86.01 million — a 13.25% month‑on‑month rise from December 2025 but a 1.42% decline year‑on‑year versus January 2025. Losses were concentrated in a few large protocol breaches: Step Finance ($28.9M), Truebit Protocol ($26.4M), SwapNet ($13.3M), Saga/Sagaxyz ($7M) and Makinafi (≈$4.13M, with ~$2.7M later recovered). In contrast, phishing and social‑engineering attacks surged, exceeding $300 million in January. The single largest social‑engineering theft involved over $282 million in Bitcoin and Litecoin after a hardware‑wallet impersonation scheme that used deep‑fake audio/video and AI‑generated messaging. Security firms note attackers are shifting focus from smart‑contract exploits to user‑targeted campaigns, leveraging domains like *.vercel.app and remote‑access tools to bypass filters. The article places January’s figures in context of 2025’s heavy losses (over $3.4B total theft, including the $1.5B Bybit breach) and highlights weaker recovery rates (~$334.9M recovered in 2025) due to rapid cross‑border fund movement. For traders: protocol exploit risk persists but social‑engineering/phishing now represents the larger immediate theft vector and systemic security concern.
Bearish
The overall impact is bearish. Large protocol breaches reduce confidence in DeFi platforms and can trigger token sell‑offs for affected projects; Step Finance and Truebit Protocol incidents likely caused immediate price pressure on those tokens and related ecosystems. More importantly, the substantially larger surge in phishing/social‑engineering losses (over $300M) increases systemic counterparty and custodial risk: retail investor fear can reduce on‑chain activity, lower liquidity, and increase volatility. Historical parallels: major breaches (e.g., Bybit $1.5B in 2025, Ronin/Poly Network incidents) led to short‑term market dips for implicated tokens and wider risk‑off sentiment across crypto markets. Short term: expect heightened volatility, defensive selling of exploited project tokens, and rotation out of smaller / custodial‑heavy assets. Exchanges and custodians may tighten access, causing temporary liquidity friction. Long term: persistent social‑engineering success could push more users toward regulated custodians or hardware‑wallet best practices, increasing demand for secure custody solutions; however, repeated high‑value thefts may slow retail inflows and institutional appetite until security and recovery frameworks improve. Overall, downside pressure on sentiment and risk assets in crypto is the most likely near‑term outcome.