Criminals stole over $1bn in cryptocurrency in just three months this year
Cybercriminals are raking in big profits from DeFi platforms
When you purchase through links on our site, we may earn an affiliate commission.Here’s how it works.
If you’re thinking of investing in decentralized finance (DeFi), the FBI wants you to think twice, as cybercriminals stole $1.3bn in cryptocurrency in just three months this year.
Citingresearchfrom US blockchain analysis firm Chainalysis, the Bureau noted almost 97% of this crypto was stolen from DeFi platforms.
DeFi platforms offer financial instruments without relying on intermediaries such as brokerages, exchanges, or banks by using smart contracts on a blockchain.
How bad is the problem?
The scale of the issue is rapidly ramping up, the $1.3bn stolen represents a 72% increase from 2021’s total and a 30% rise compared to 2020 according to Chainalysis.
Aside from the research, the FBI highlighted some trends it noticed from its own investigations.
These included cybercriminals who initiated a “flash loan” that triggered an exploit in a DeFi platform’s smart contracts, causing investors and the project’s developers to lose approximately $3 million in cryptocurrency as a result of the theft.
It also observed hackers exploiting a signature verification vulnerability in a DeFi platform’s token bridge to withdraw all of the platform’s investments, as well as an instance where hackers manipulated cryptocurrency price pairs by exploiting a series of vulnerabilities, before conducting leveraged trades.
Are you a pro? Subscribe to our newsletter
Sign up to the TechRadar Pro newsletter to get all the top news, opinion, features and guidance your business needs to succeed!
DeFi threats
If this hasn’t totally put you off investing in DeFi, the FBI has some handy tips to help keep you safe.
These include researching DeFi platforms, protocols, and smart contracts before investing and being aware of the specific risks involved in DeFi investments.
The FBI also recommended ensuring the DeFi investment platform has conducted one or more code audits performed by independent auditors, as well as being suspicious of DeFi investment pools with extremely limited timeframes to join and rapid deployment of smart contracts.
In addition, the FBI pointed out the potential risk posed by crowdsourced solutions in terms of vulnerability identification and patching, as open source code repositories can allow unfettered access to individuals with “nefarious intentions”
Hackers hit bZX DeFi platform, stealing millions of dollars of crypto>Scammers are using a whole load of tricks to launch cryptomining scams>Our guide to the best endpoint protection
Though DeFi may still be a risky business for consumers, the risks it poses to the wider economic system may be limited, at least for the time being.
In arecent report, the Bank of England’s financial policy committee said that the “direct risks to the stability of the UK financial system from cryptoassets and DeFi are currently limited”.
That’s not to say the rise of DeFi couldn’t impact the rest of the financial system in the future.
The report went on to say that “if the pace of growth seen in recent years continues, and as these assets become more interconnected with the wider financial system, cryptoassets and DeFi will present financial stability risks”.
Will McCurdy has been writing about technology for over five years. He has a wide range of specialities including cybersecurity, fintech, cryptocurrencies, blockchain, cloud computing, payments, artificial intelligence, retail technology, and venture capital investment. He has previously written for AltFi, FStech, Retail Systems, and National Technology News and is an experienced podcast and webinar host, as well as an avid long-form feature writer.
Scammers are using fake copyright infringement claims to hack businesses
HPE reveals critical security bug affecting networking access points
Move over Steam Deck and forget the Switch 2 - the next-generation of handheld gaming PCs is almost here
