Cryptocurrency Hacks Increase As North Korea Focuses on DeFi

A total of $1.9 billion in cryptocurrency was stolen in hacks, and the sector’s vulnerability is still DeFi protocols per the analysis report:

“This trend doesn’t appear set to reverse any time soon, with a $190 million hack of cross-chain bridge Nomad and a $5 million hack of several Solana wallets already occurring in the first week of August.”

According to a report from blockchain analysis company Chainalysis, the amount of money stolen in cryptocurrency hacks this year has increased as a result of attackers’ ease of access to decentralized financial protocols. Per Chainalysis, the value of digital tokens stolen in hacks this year through July was $1.9 billion, an increase of 58% from the same period in 2021.

Following several significant hacks this year, DeFi protocols, particularly cross-chain bridges used to transfer tokens across blockchains, have come to light as one of cryptocurrency’s weakest links. Such protocols’ reliance on open-source code makes it simple for criminals to find bugs or other weaknesses to take advantage of, according to a Chainalysis report:

“It’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices.”

One concerning indication is that criminal cryptocurrency activity seems to be more resilient to falling cryptocurrency prices than the larger digital asset market. According to the report, legitimate transactions decreased at a rate that was more than double that of illicit transactions through July compared to a year earlier.

Hackers stole about $600 million from Axie Infinity’s Ronin bridge in March, and $100 million from Harmony’s Horizon bridge in June.

DeFi protocols have also formed into a common aim for state-sponsored hacking organizations. According to Chainalysis, organizations with ties to North Korea have stolen $1 billion worth of cryptocurrency from DeFi protocols so far this year.

Although hacks remain a significant threat, Chainalysis indicated that illegal activity in other facets of cryptocurrency has significantly decreased. According to the report, cryptocurrency-related scams have made $1.6 billion so far in 2022, which is 65% less than a year ago. Due in large part to the crackdown on the Hydra marketplace in April, revenue on so-called darknet marketplaces is down 43% this year.

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