The Growing Accountability Crisis in Digital Finance

In the last two years alone, the direct and indirect collective losses to the crypto market from malicious attacks and hacks have amounted to billions of dollars, and this is only a partial perspective on the phenomenon, as not all cases are reported.

In most cases, the private key was not required at all for threat actors to successfully execute the attack. In fact, we have witnessed cases where funds were stolen from cold wallets and custodial wallets too. The security procedures worked exactly as designed, right up until they failed to perform, and by then it was already too late.

The digital asset industry can no longer treat the cybersecurity challenge the same way it has until now, especially in the post-AI era. A transaction can come from an authorized, whitelisted wallet, carry valid signatures under the signing policy and pass every control, yet still be sent to a malicious destination wallet. By the time anyone notices, not only is it too late, but there is also no one to call.

Measuring the Wrong Thing

Institutions have invested heavily in custody, blockchain intelligence, AML/KYC/KYT and transaction monitoring. These tools are essential. But the industry still grades security by what it detects: Was the wallet authorized? Was the counterparty flagged? Did an alert fire? Do we know the transaction? Well… to know the transaction, we have to have the transaction. And once we have the transaction, isn’t it already too late?

For any institution moving significant value on-chain (for some of us, even $10K is high), one measure matters more than all of them: was the loss prevented?

Today’s most effective attacks don’t break cryptography or encryption. They exploit the gap between authorization and intent, and the weak points in an organization’s procedures. In address poisoning, an attacker plants a lookalike address in a wallet’s transaction history, or even during the transfer itself, and that’s it. An employee follows procedure, copies the address and approves the transfer. Everything checks out, except the destination. And nowadays, when smart contracts are embedded in almost every payment flow (especially among SMB Web3 organizations), threat actors map and probe the basic building blocks for one main purpose: to find the weak point in the process or in the smart contract source code and engineer the attack from there. That’s why a simple audit is not enough.

Closing that gap requires enhanced, multi-layered protection, in real time, on every transaction, before execution, while intervention is still possible.

At Sailo, that’s exactly how we approach it, with four layers of protection. We start with 24/7 monitoring and, most importantly, our Decision Layer, the second line of defense, powered by our KYR™ (Know Your Risk) technology. Sailo’s offering does not replace custody, analytics or compliance. It answers the questions they were never built to ask: Before the money moves, is the wallet clean, and are the funds safe to use? Should this transaction be executed at all? And will it compromise my treasury and wallets?

When prevention is not enough

It is almost impossible to promise that every loss will be prevented. The real challenge is what happens next.

We recently worked with a company that sent a small test transaction to a well-known financial services provider, then followed with about $1.1 million. In between, the recipient’s wallet was compromised. Roughly $1.095 million vanished.

Our team traced the funds, reconstructed the transaction trail and provided the evidence needed for recovery. The money was returned in full.

A technically excellent incident report has value. But the customer did not need an explanation. It needed its money back.

Who carries the risk? What about accountability?

Nowadays, it’s not enough to outsource the risk to a third-party service provider. Global regulation and new industry standards require C-level executives and UBOs to be accountable; legally, they are the ones responsible.

Traditional finance settled this long ago. Banks don’t stop at fraud detection; they define liability, build recovery mechanisms and back their obligations with capital and insurance. Digital asset security has to meet the same standard.

That means covering the full lifecycle of a transaction: evaluating risk before execution, monitoring wallets continuously, protecting sensitive data, recovering funds when incidents occur, and standing behind the outcome with an insurer-backed financial guarantee. Once a guarantee is on the table, a provider is judged not only on its technology, but on what it is willing to stand behind.

This is how an industry raises the bar.

For banks, payment providers, custody service providers and asset managers scaling their digital asset activity, this is becoming a governance question as much as a security one. Institutions should be asking:

1. Can it stop a high-risk transaction before value moves?

2. If funds are lost anyway, can it help recover them?

3. When recovery is not enough, what stands behind it financially?

The next standard for digital asset security will not be another alert, another dashboard or a better explanation of what went wrong.

It will be whether the money was protected, and who was accountable when it counted.

Ehud Tal is Co-Founder & CEO of Sailo Technologies, which provides a Decision Layer for institutional digital asset transactions, combining real-time prevention, 24/7 monitoring, privacy, forensic recovery and an insurer-backed financial guarantee.