Criminals stole over $1bn in cryptocurrency in just three months this year
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.
Citing research (opens in new tab) from 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.
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”
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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 a recent report (opens in new tab), 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”.
Audio player loading… 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. Citing research (opens in new tab) from US blockchain analysis firm Chainalysis, the Bureau noted almost 97% of this…
