As the cryptocurrency continues to grow, the frequency and the extent of crypto-related heists also increase.
According to blockchain data platform Chainalysis, cryptocurrency-related hacks have recorded a significant jump in the first seven months of the year amounting to $1.9 billion funds stolen from decentralized finance (DeFi) protocols.
Considering that the market performed much better last year from January to July than the current bear market this year, last year’s stolen funds from hacking incidents only amounted to $1.2 billion, while the hacking incidents this year rose up to 60%.
According to the Chainalysis report, the increase coincides with an increase in hacks into the protocols for DeFi. DeFi applications, mostly running on the Ethereum blockchain, are financial platforms that enable crypto-denominated lending outside of traditional banks. Since protocols are programs that link crypto transactions without an intermediary, users may be vulnerable to hackers. This is because these protocols are mostly built on open-source code that hackers can analyze before carrying out a heist.
“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits and it’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices,” the report read.
Chainalysis pointed out that the funds stolen from DeFi protocols can be attributed to “bad actors” affiliated with North Korea, especially elite hacking units like the Lazarus Group.
“This trend doesn’t appear set to reverse any time soon, with a $190 million hack of cross-chain bridge Nomad and $5 million hack of several Solana wallets already occurring in the first week of August (neither is represented on the graph above as we’ve chosen July 31 as our cutoff point),” the report added.
According to the estimates of the blockchain intelligence firm, North Korea-affiliated groups have stolen approximately $1 billion of cryptocurrency from DeFi protocols so far this year. This includes the Axie Infinity exploit of 173,600 Ethereum (ETH) and 25.5 million USD Coin (USDC), which are worth a combined $625 million last March.
Just this month, (DeFi) protocol Curve.Finance also fell victim to an exploit where thieves stole a total of $570,000 as its front end was compromised through an attack that took control of its nameserver. (Read more: DeFi Exchange Curve Loses $570,000 in Frontend Hack)
The Solana Ecosystem was also exploited this month where the Solana-based wallets Phantom, Slope, and Trust Wallet have been drained without the knowledge of its owners. (Read more: Filipino Solana Developer Explains How the Phantom Wallet Hack May Have Occurred)
On the other hand, Chainalysis noted the decline in crypto scams during the same period is in line with the slump in digital asset prices. According to their data, the total scam revenue in the year to July was $1.6 billion, down 65% from around $4.46 billion in the same period last year.
“Scams are down primarily because of the crypto downturn, but also because of the many law enforcement wins taken against scammers and the product solutions that exchanges can use to fight scamming,” Chainalysis’ Director of Research Kim Grauer told Reuters.
This article is published on BitPinas: Losses from Crypto Hacks Surged 60% in 7 months, Almost $2 Billion Stolen – Chainalysis
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