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# Exploits, Hacks and Attacks
Like any piece of software, smart contracts with poorly written code have significant vulnerabilities. In the DeFi space, these weaknesses generally manifest in two ways:
1. Hacks – an illegal practice where someone breaks into a smart contract to steal funds
2. Exploits – a legal, but arguably unethical, practice where users figure out a weakness in a contract’s economic model and exploit that for economic gain (imagine a DeFi version of George Soros’s infamous attack on the Bank of England)
While estimates on the scope of these losses vary wildly ([Chainalysis](https://ambcrypto.com/7-7-billion-lost-to-crypto-scams-but-how-serious-have-rug-pulls-been/) pegs them at almost $8 billion), research firm [The Block](https://www.theblockcrypto.com/data/decentralized-finance/exploits) has been able to confirm over 70 exploits in the DeFi space as of November, stealing over $1.4 billion. Of these, 34 were “flash loan attacks”, where assailants used flash loans to raise millions of dollars to exploit economic weaknesses.
In an ironic twist, $611 million was returned by Poly Network’s hacker, who said that he or she only did it to expose a vulnerability in the network.
Perhaps more nefarious that hacks or exploits though are scams known as “rug pulls” – when an anonymous founder raises funds through a token issuance and then simply disappears with the money.
In late October a group of scammers leveraged the hype of the popular Netflix series to create a Squid Game token, listed the token on decentralized exchanges, raised millions from retail investors and then vanished.
These rug pulls can be devastating to the ecosystem, and research firm Chainalysis [reports](https://ambcrypto.com/7-7-billion-lost-to-crypto-scams-but-how-serious-have-rug-pulls-been/) that they caused losses of nearly $3 billion in 2021 alone.
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