Losses driven by cryptocurrency hacks jumped nearly 60% in the first seven months of 2022 to $1.9 billion, says a report by Chainalysis. This was pushed by a surge in funds stolen from decentralized finance protocols. Stolen funds, in the same period 2021, amounted to $1.2 billion.
The report stated that the trend is not likely to reverse anytime soon because of the $190 million hacking of cross-chain bridge Nomad and the $5 million hacking of several Solana wallets which occurred in the first week of August. The Chainalysis report described DeFi protocols as uniquely vulnerable to exploitation. It outlined that DeFi protocol’s open source code can be studied ad nauseum by cybercriminals looking for exploits. The report said it’s possible that the protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices.
Chainalysis noted that much of the funds stolen from DeFi protocols can be attributed to bad actors affiliated with North Korea. It highlighted the elite Lazarus Group. The blockchain analysis firm said that North Korean-affiliated groups, so far this year, have stolen about $1 billion of cryptocurrency from DeFi protocols. Chainalysis recorded a sharp 65% decline through the month of July, in line with the downturn in digital asset prices. July saw total scam revenue as $1.6 billion, down by 65% from around $4.46 billion in the same period last year.
Kim Grauer, Chainalysis’ director of research, said scams are down because of the crypto downturn. She also attributed it to the many law enforcement wins taken against scammers and the product solutions that exchanges use to fight scams or exploitations.