Chainalysis: DeFi services are becoming more popular with cybercriminals

Analysts at Chainalysis claim that illegal activity in DeFi protocols has grown exponentially compared to last year.

Chainalysis has published a new report
about criminal activity in Web3. According to the study, the overall level of illegal activity in the crypto industry has decreased, but it has sharply increased in decentralized finance (DeFi) protocols. Analysts claim that 97% of the $1.7 billion worth of cryptocurrencies stolen in 2022 came from DeFi protocols.

Experts received these figures thanks to two major events at the beginning of the year: the attack on the Ronin Network sidechain and the hacking of the Wormhole bridge in the Solana network. In the first case, the attackers managed to withdraw 173,000 ETH and 25.5 million USDC ($625 million), in the second case, 120,000 wETH ($320 million). Both attacks, according to experts, are a continuation of a trend that began during 2021, when hackers turned more and more attention to DeFi. The increase in theft has also been accompanied by an increase in money laundering cases.

In 2022, DeFi protocols accounted for 69% of funds sent from wallet addresses linked to criminal activity, according to Chainalysis. In 2021, their share was only 19%. According to analysts, one of the main reasons is the ability of decentralized finance protocols to exchange one type of cryptocurrency for another, which makes it very difficult to track the movement of funds. At the same time, many DeFi services provide this opportunity without identifying clients.

Last month, Macau police detained two local residents and six Hong Kong citizens on charges of fraud and laundering some $53 million through digital currencies.