Hacker attacks in the cryptocurrency sector not only continue but are also on the rise, further hurting the beleaguered industry that has seen its market capitalization drop by more than 50% this year.
In particular, the hacker loot in the first seven months of 2022 amounted to $1.9 billion, up 60% compared to the corresponding period of the previous year, mainly due to the increase in the theft of funds from decentralized finance (DeFi) protocols, such as comes from a blog post by blockchain analytics firm Chainalysis published on Tuesday.
In the same period last year, the theft of funds amounted to $1.2 billion.
DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable lending through cryptocurrencies, outside of the traditional banking system.
Chainalysis points out that the trend is not likely to reverse anytime soon, given that just in the first week of August there were two more hacks that resulted in the theft of $190 million from blockchain trading company Nomad and an additional $5 million from Solana wallets.
“Decentralized finance protocols are extremely vulnerable to hackers because their open source code can be studied ad nauseum by cybercriminals looking for prey and because protocols are likely to come to market and develop very quickly leading to gaps in optimal security practices,” Chainalysis points out.
Much of the funds stolen from DeFi protocols can be attributed to “malicious actors” linked to North Korea, especially elite hacking units like the Lazarus Group, the blockchain analytics firm adds.
Chainalysis estimates that so far this year, groups linked to North Korea have stolen around $1 billion of cryptocurrency from DeFi protocols.
In terms of crypto scams, the blockchain intelligence firm reports a significant 65% drop through July, commensurate with the fall in digital asset prices. Total fraud losses from the start of the year through July were $1.6 billion, down 65 percent from about $4.46 billion in the same period last year.
It is noted that the capitalization of the cryptocurrency sector late last Thursday amounted to 1.1 trillion. dollars, according to CoinGecko, down more than 50% from about 2.35 trillion. dollars which was calculated late this year. Bitcoin has tumbled about 48% so far this year, hovering between $20,000 and $24,000 in recent months.