DeFi Hacks Rise from Trivial to $98 Million in 2020: CipherTrace Report
In the last 10 months of 2020, losses from cryptocurrency hacks, thefts, and frauds have declined a good $1.8 billion compared to last year. But at the same, the crimes in the “decentralized finance” (DeFi) sector jumped.
Crypto crime reached $4.5 billion globally in 2019, as per the report from crypto intelligence company CipherTrace.
“What we have seen is that exchanges and other cryptocurrency players have implemented more security procedures,” Dave Jevans, CipherTrace’s chief executive officer, told Reuters.
“They have taken the guidance and implemented the procedures to secure their funds better. So you’re going to see less mass-scale hacks.”
20% of these hacks, at around $98 million, belong to DeFi space, which currently has a record of $13 billion of total value locked (TVL), as per DeFi Pulse. The sector has grown by 1,825% since the beginning of this year.
The DeFi mania attracted criminal hackers to space, which resulted in the most hacks for the sector this year. In 2019, the DeFi hacks were negligible.
“Companies and individuals have rushed DeFi products to market that have not gone through security verification and validation,” said Jevans. “So people are figuring out that there’s a weakness here.”
After a crazy bull run in August that topped out the next month, this week, as Bitcoin's price took a breather following its run-up to almost $16,000, DeFi tokens are yet again enjoying a hot rally.
Some of the blue-chip DeFi tokens are up 60% to over 100% this past week, as per Messari.
According to Jevans, because of these networks being permissionless by designs, they can easily become a haven for money launderers.