According to Chainalysis’ Web3 Safety & Compliance report, illicit cryptocurrency transactions in the decentralised finance (DeFi) sector have increased during the previous two years.
Over the previous three years, illegal DeFi operations have gradually increased in terms of raw value as well as as a proportion of total cryptocurrency transaction value, primarily through fund theft through hacking and misuse of the DeFi protocol for money laundering.
According to Chainalysis data, the total value received by DeFi from illicit and share of total value would almost reach $2.5 billion in 2022.
DeFi refers to peer-to-peer financial services on public blockchains.
According to Chainalysis, since the beginning of 2021, Ronin Bridge and Wormhole Network-driven breaches have increased the value stolen from DeFi protocols. It reached its highest-ever levels in Q1 2022, with cryptocurrencies worth between $1 billion and $1.5 billion stolen.
According to the report, DeFi protocols have become the go-to target for hackers looking to steal cryptocurrencies in 2021.
Although DeFi protocols have been used to acquire an increasing percentage of all funds taken from cryptocurrency platforms since the beginning of 2020, the majority of stolen funds were lost in 2021, according to the report.
DeFi protocols have had significant money laundering issues. These protocols account for a large portion of the funds sent from illicit addresses to services in the previous two years.
According to the report, DeFi methods became the largest beneficiary of illegal funds in 2022, receiving 69% of all funds transferred from addresses connected with criminal activities, up from 19% in 2021.
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