Mental health in Web3: how victims of hackers deal with trauma

When Andre Durant – not his real name – first learned how much he had lost to digital hackers, his wife thought he was having a heart attack.

Just a few minutes prior, Durant, who resides in Singapore, had begun to receive messages on his phone letting him know that money was being moved out of his account, in transactions that he hadn’t authorized. By the time he got to his computer, most of the assets in his account – over a million Singapore dollars (over US$750,000), most of which were in bitcoin – were gone.

Image credit: Timmy Loen

Durant is an experienced investor, having traded in several other asset classes before venturing into crypto. As such, he thought of himself as someone who was aware of cybersecurity, but he is now part of a growing number of people who have faced mental health issues after suffering major financial losses from the theft of digital assets.

Over the past couple of years, losses from digital hackers have reached into the billions. According to a report from ImmuneFi, a website that offers bug bounties for Web3 platforms, there have been US$473.2 million lost to crypto-related hacks and rug pulls in the first five months of 2024.

Durant was one of the several victims impacted by a hack on LastPass, a crypto password vault firm.

Prior to the LastPass hack, Durant thought he was financially secure – he had enough to pay for his son’s college, and he had considered retiring early. That was now all gone.

“Devastated. I mean, devastated,” he tells Tech in Asia. “I was about to faint. I mean, I’ve seen enough in my life to not have any suicidal thoughts. But the way you play life is influenced by how confident you feel in your situation.”

He adds that at the time, he didn’t know who to trust, and he didn’t have the confidence to continue trading.

If there was any silver lining, it was that Durant’s investments were diversified – he had traditional assets in his portfolio. But that didn’t stop the panic attack.

Professor Rozaina Kamsani, member of the Universiti Utara Malaysia’s Department of Psychology & Counseling, says a panic attack – typically associated with shortness of breath, tightness of the chests, and full body shaking – is not unusual for people who experience trauma, especially when the source of the trauma happens quickly.

When the losses come, “they often happen in the blink of an eye,” and the investors can suddenly feel worthless, she tells Tech in Asia.

While there are no figures available yet, researchers fear that losses from crypto – whether from hacks or just losses in the value of the assets – could hit harder than losses from traditional investments for a number of reasons, particularly because crypto investors are relatively young and usually do not have additional financial assets to fall back on.

Researchers also point to other factors such as high-pressure sales pitches from the crypto industry, a lack of financial literacy, a lack of support from family and friends, and the speed at which losses in crypto have hit investors.

It wasn’t because it was crypto

Pains in explaining crypto losses to family and friends