DeFi has lost $474 million to hacks and cyberattacks this year, accounting for 69% of total hack losses in the crypto industry in 2021.
The forensic analysis company in blockchain, CipherTrace published its report on crimes of cryptocurrencies, and anti-money laundering in August this year, revealing that hacks into the ecosystems of decentralized finance (Challenge) caused the loss of $474 million in value; a figure that represents 69% of all losses seen in the crypto industry this year. This is not counting the recent hack of the DeFi protocol Poly Network, which surpassed $610 million in stolen funds on Monday; although it should be noted that the hacker is giving back funds into the protocol, with over $260 million deposited back into Poly Network addresses at the time of writing.
Despite this, CipherTrace data shows that the reality is that value losses in the cryptocurrency industry have decreased significantly in recent years. According to the report's data, for 2020 the total losses due to hacks and exploits on cryptocurrency platforms and projects were $1.900 billion, while in 2019 the losses exceeded $4.500 billion. The decrease, as can be seen, is 39% per year, on average.
On the other hand, the data also shows that, in DeFi specifically, where hacks have increased.
Decentralized finance ecosystems are becoming the preferred target of hackers and cybercriminals, due to the amount of value that these protocols move and the errors, bugs and vulnerabilities present in some of their contracts. Perhaps, the frenzy that DeFi aroused as decentralized and easily accessible financial ecosystems, pushed many developers to launch protocols without carrying out in-depth security audits, which guarantee the security of the projects and the protection of the funds and their investors.
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DeFi, 30 attacks so far this year
The main cyberattacks and frauds within the crypto industry are occurring in DeFi. CipherTrace points out that attacks on this ecosystem increased 2,7 times compared to 2020, causing losses worth $361 million in bugs and direct exploits to the platforms; while developer exit scams and bull runs caused losses of $113 million. In total, from January to July of this year, the value illegally extracted in the DeFi ecosystem amounts to $474 million.
Source: CipherTrace
The blockchain analytics firm highlights that while global fraud cases related to cryptocurrencies decreased, in DeFi, this type of fraud has tripled so far this year.
CipherTrace also highlights that, in total, 30 attacks against DeFi have been carried out in the months of 2021; most of them were executed during the second quarter.
Ransomware, second leading cause of crypto losses
CipherTrace also highlights that ransomware attacks are becoming increasingly popular nowadays, demanding cryptocurrency as ransoms.
Some of the most well-known ransomware cases, which raised the ire of the United States, were that of Colonial pipeline y JBS. In total, both companies paid nearly $20 million in cryptocurrency as a ransom to the cybercriminals to recover their services. Also, the technology solutions company Cashier Kaseya fell victim to ransomware, which affected more than 40 of its direct enterprise customers and over 1 million associated operating systems worldwide. Kaseya's hackers demanded a ransom of $70 million in cryptocurrency, although the company refused to pay and decrypted the systems on its own.
Recently, IT company Accenture also fell victim to ransomware. On Tuesday, Accenture reported on a ransomware attack carried out by the hacker group Lockbit. Although the hackers accessed Accenture files and information, the company's cybersecurity team was able to stop the attack, preventing further damage.
The frequency and magnitude of these attacks led the US government to declare them a national security threat.
Other frauds in the crypto industry
The Cajee brothers' scam with their Africrypt platform is present in the CipherTrace report. As reported Bit2Me News, brothers Raees and Ameer Cajee were reported by their clients and investors, who accuse them of disappearing with 69.000 BTC that were deposited on the platform. Although CipherTrace notes that it has not been able to verify this figure, it considers it to be one of the largest crypto scams seen in the industry.
The blockchain analytics company also highlights scams that have been carried out in the crypto industry using the names of well-known public figures such as Elon Musk.
CipherTrace’s report also points to actions that regulators are beginning to take to minimize risks in the cryptocurrency industry. For example, the arrest of more than 1.000 citizens suspected of laundering money with cryptocurrencies in China, the United States Securities and Exchange Commission’s lawsuit against five promoters of the BitConnect scheme, and the arrests of members of Brazil’s Bitcoin Banco group, among others.
Continue reading: 7.000 UK companies, including crypto, forced to report annual financial crimes by FCA
