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DeFi protocols needs to blame for 60% rise in crypto hacking activity: Chainalysis report

According to the Chainalysis blogpost published on August 16, the rise in the stolen funds from decentralised finance (DeFi) is responsible for the 60% soar in the losses from the cryptocurrency hacks.

As per the post, during the first seven months of the year, i.e., from January to July 2022, funds stolen from decentralised finance through cryptocurrency hacking activity accounted for $1.9 billion, which is up from $1.2 billion in the same period last year.

Chainalysis warned and said that the trend in hacking activity is unlikely to be reversed in the short term, due to the $5 million hacking of Solana wallets and the $190 million hacking of cross-chain bridge Nomad, which happened recently in the first week of August.

Chainalysis said in the post, “DeFi networks are vulnerable to hacking activity, as their open-source code can be analysed relentlessly by cybercriminals searching for exploits and it’s possible that protocols’ incentives to arrive at the market and develop rapidly lead to lapses in security best practices.”

Moreover, Chainalysis gives credit for a large part of the unlawful activity to the “bad actors” related to North Korea, like the notorious Lazarus Group. As per the estimate of Chainalysis, North Korean groups stole roughly $1 billion of cryptocurrency from the DeFi networks until this year.

Due to the fall in crypto prizes, cryptocurrency scams independent of DeFi have seen a sharp decline of 65% in the month of July. Total scam revenue from the year to July accounts for only $1.6 billion, as compared to $4.46 billion in the same period of last year.

Chainalysis research director, Kim Grauer, said, “scams are down not only due to the significant crypto crash but also due to the numerous policies taken against the scammers and the product solutions of the exchange to combat the scamming activity.”

According to Chainalysis research, scam-related activity has fallen with the fall in the price of Bitcoin since the start of the year. Apart from the drop in scams, the aggregate number of individuals becoming victims of scams has fallen to its four-year low.

Chainalysis said in the report, “the data indicate that fewer people are becoming the victim of the cryptocurrency scams. “One reason for the fall in scam would be, drop in the prices of crypto assets which introduce themselves as a passive crypto investing with huge returns – are less alluring to possible victims.”

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