Losses from crypto hacks rose 60% to $1.9 billion in January-July: Report
Losses from the cryptocurrency hack rose nearly 60 percent to $1.9 billion in the first seven months of the year, according to a blog post by blockchain analysis firm Chainalysis released Tuesday, following a surge in funds stolen from decentralized finance (DeFi) protocols. Inspired by. ,
In the same period last year, the amount of money stolen from hacking stood at $1.2 billion.
DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable crypto-denominated lending outside of traditional banks.
Chainalysis noted that the trend is unlikely to reverse any time soon, given the $190 million cross-chain Bridge Nomad hack in the first week of August and the $5 million hack of multiple Solana wallets.
“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied by cybercriminals looking for exploits and it is possible that the incentives of the protocols to reach the market and rapidly increase security best practices. Make a mistake,” said Chainalysis. blog.
The US firm wrote that much of the money stolen from the DeFi protocol can be attributed to “bad actors” affiliated with North Korea, particularly elite hacking entities such as the Lazarus Group.
Chainalysis estimates that so far this year, groups affiliated with North Korea have stolen nearly $1 billion worth of cryptocurrency from the DeFi protocol.
With regard to crypto scams, the blockchain intelligence firm saw a sharp 65 percent drop during July, in line with the decline in the prices of digital assets. Total scam revenue as of July was $1.6 billion, down 65 percent from about $4.46 billion in the same period last year.
Scammers can impersonate legitimate businesses and provide fraudulent crypto coins or tokens.
“Scams have subsided primarily due to the crypto recession, but there are many law enforcement victories against scammers and product solutions that exchanges can use to fight scams,” said Kim Grauer, research director, Chainalysis, in an email. . Reuters.
According to CoinGecko, the crypto market capitalization stood at $1.1 trillion late Thursday, down more than 50 percent from about $2.35 trillion at the start of the year. The price of bitcoin is down about 48 percent so far this year and has been in the range of $20,000 to $24,000 in the past few months.
Since January 2022, scam-related earnings have fallen in line with the price of bitcoin, Chainalysis said. Not only did the income from scams decline, but the cumulative number of individual transfers in scams in 2022 was the lowest in the past four years.
“Those numbers suggest that fewer people are falling for cryptocurrency scams than ever before,” Chainalysis said in the report.
“One of the reasons for this may be that with asset prices falling, cryptocurrency scams – which typically present themselves as passive crypto investment opportunities with huge promised returns – have little to do with potential victims. are tempting.”