A remarkable $1.9 billion worth of bitcoin was stolen in crypto hacks of various services in the first seven months of this year.
DeFi Saw Huge Cases Of Hacks, Chainalysis Reports
Even though several cryptocurrencies saw a sharp decline in value in the first half of this year, there has been a surge.
The increase coincides with an increase in hacks into the protocols for decentralized finance (DeFi), according to Chainalysis’ blog post from Tuesday. The majority of DeFi applications are Ethereum-based, enabling crypto financing outside of conventional banks. Using software that enables users to deal directly with one another over the blockchain, the digital record that serves as the foundation for cryptocurrencies, the phrase is used to describe services that aim to replace traditional financial institutions.
Users may be vulnerable to hackers because protocols, which are programs that link crypto transactions without an intermediary, are built on open-source code that would-be thieves can analyze before carrying out a heist.
The blockchain analytics firm said in a blog post: “No area of cryptocurrency-based crime is bucking the 2022 trend of declining revenue like the stolen fund.”
DeFi protocols were the target of several of 2022’s most significant cryptocurrency hacks, including the $625 million Ronin network hack of the computer game Axie Infinity in March. Since then, some of these losses, notably the Axie incident, have been linked to North Korean hackers.
“We estimate that so far in 2022, North Korea-affiliated groups have stolen approximately $1 billion of cryptocurrency from DeFi protocols,” the blog stated.
The report’s finding that growing hacking activity isn’t likely to slow down anytime soon is its most worrying aspect.
There were also some notable attacks during the first half of August, which are not covered in the report, including a $190 million hack of the cross-chain bridge Nomad and a $5 million hack of numerous Solana wallets.
Scams Have Slowed Down
However, this year has seen a decline in crypto scams, which has decreased by 65%, roughly matching the fall in cryptocurrency prices over the same time period. This year, scammers brought in a total of $1.6 billion, a decrease from the $4.46 billion reported at this time previous year.
“Since January 2022, scam revenue has fallen more or less in line with Bitcoin pricing. With asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims.”
“Those numbers suggest that fewer people than ever are falling for cryptocurrency scams,” Chainalysis further said in the report.
According to Chainalysis, scam-related revenue has decreased along with the price of bitcoin since January 2022. In addition to a decline in scam proceeds, 2022 saw the fewest total individual transfers to scams over the previous four years.
“One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims.”
This year, there has been pressure on regulators to tighten the reins on the cryptocurrency industry. While a new US Senate proposal would establish the Commodities and Futures Trading Commission as the primary industry overseer for cryptocurrency, the Securities and Exchange Commission announced it would nearly increase the employees in its crypto department.