It looks like crypto criminals are beginning to change up their gameplans to obtain funds that aren’t theirs. It used to be that many of them targeted either exchanges or individual wallets, but now it seems they are beginning to target decentralized finance (defi) protocols.
Defi Is Attracting Criminals
Defi is a monetary space where, for lack of better terms, virtually anything goes. Nobody is privy to each other’s transactions or activities. There are no prying eyes, no third parties, and individuals can transact money in complete and total privacy. The fact that there are no rules makes it a prime target for many new cybercriminals looking to obtain funds illicitly.
This notion is getting very big in dark circles given that of the $1.68 billion in crypto that’s been stolen since the beginning of 2022, 97 percent of it came from defi platforms. At the same time, it looks like illicit activity in the cryptocurrency space has ultimately gone down over the last three years.
According to a report issued by blockchain analysis firm Chainalysis, illicit transactions only accounted for about 0.15 percent of all transactions in the crypto space during 2021. This is significantly down from the 3.37 percent witnessed in the year 2019.
Ethan McMahon – an economist at Chainalysis – explained in a recent interview:
The volume of illicit cryptocurrency transactions as a share of the overall market is at an all-time low. This bodes well for the adoption and utilization of these digital assets by a broader segment of consumers and businesses. However, as the cryptocurrency ecosystem matures, cybercriminals are setting their sights on the emerging trends of defi and NFTs. As with the early days of cryptocurrencies, hackers have been quick to execute their illicit schemes using the newest technologies. For consumer confidence to grow, it is imperative for industry stakeholders to step up and stamp out this abuse of these technologies. With the right tools, government agencies and cryptocurrency businesses can detect, prevent, and investigate illicit activity.
North Korea Is a Huge Player
It appears that most of the hacking taking place in the world of defi is being instigated by North Korea, which is home to Lazarus and many other large organizations that seek to garner crypto funds illicitly. North Korea is believed to have stolen as much as $840 million in crypto this year alone. McMahon says:
Attacks on defi protocols by North Korean-linked hackers demonstrate the need for these protocols to shore up their systems, not just to protect consumers, but also for national security. Thanks to the transparency of the blockchain, government agencies can identify and target the services they use for money laundering, such as OFAC’s first-ever sanctioning of a mixer a couple of weeks ago and make it more difficult for DPRK and others to cash out their ill-gotten gains.