Cryptocurrency theft by cyberattacks in 2022 totals $1.9 billion, report says

A staggering $1.9 billion worth of cryptocurrencies was stolen in cyberattacks from various services in the first seven months of this year, marking a 60% increase from the same period a year ago.

The data is part of a report released on Tuesday (16), produced by blockchain analysis firm Chainalysis.

The increase comes even as the value of many cryptocurrencies plummeted in the first half of this year. The report attributed much of the increase to encroachments on decentralized finance (DeFi) protocols.

The term refers to services that attempt to replace traditional financial institutions with software that allows users to transact directly with each other through blockchain, the digital ledger that underpins cryptocurrencies.

Some of the biggest cryptocurrency attacks of 2022 were on DeFi protocols, including the theft of $625 million from the Ronin network of video game Axie Infinity in March. Some of these scams, including the Axie incident, have already been blamed on hackers associated with North Korea.

An estimated $1 billion has been stolen from DeFi protocols by North Korean-affiliated hackers so far this year, according to the Chainalysis report.

These robberies are believed to be part of a broader strategy to help generate revenue for the North Korean regime, as it has largely been isolated from the world.

DeFi transactions, based primarily on Ethereum blockchain technology, have rapidly exploded in popularity over the past couple of years.

These protocols are “uniquely vulnerable to hacking” thanks to their open source code, large asset pools, and rapid growth that may have led to a lapse in security best practices, according to Elliptic, a security analytics firm. blockchain.

“The technology is relatively immature, in general. This space has really only emerged in the last couple of years,” Tom Robinson, Elliptic’s chief scientist, told CNN Business . “Mistakes are being made, mistakes are being learned, but there are always bugs in the software. I think the problem here is that the software is the only thing that protects these assets.”

Chainalysis warns that the rise in cryptocurrency thefts shows no signs of abating despite the slump in the cryptocurrency market.

“As long as cryptographic assets held in DeFi protocol pools and other services are valuable and vulnerable, bad actors will try to steal them,” according to the report.

The company points to two recent large-scale DeFi cyberattacks, including the $190 million allegedly stolen from cryptocurrency bridge provider Nomad, which took place after the data cut point for the survey.

But there may be at least one silver lining to the report: the amount of money lost to cryptocurrency scams such as the $2 billion Ponzi scheme carried out by BitConnect founder Satish Kumbhani was 65% lower than a year ago.