Ciphertrace Report: Cryptocrime Is Moving To DeFi

    17 May 2021

    According to the latest “Cryptocurrency Crime and Anti-Money Laundering Report” by a blockchain analyst firm Ciphertrace , the impact of hacks and exploits that have moved into the DeFi realm is more than just the impact of classic centralized exchange hacks and other types of fraud.

    The company found that, on the whole, the cryptocurrency sector has become a lot more secure, with only $432 million being stolen as a result of illegal activities in the space. In fact, the projection is way lower than the $1.9 billion Ciphertrace found were taken during 2020. In contrast, these attacks are now pivoting to a sector that is easier to tackle: decentralized finance.

    The scams and exploits in the defi sector pulled $156 million in the period studied by the report, already surpassing the number that was taken during 2020. This increase is related to the rise of defi, which is now gobbling more than a third of the whole Ethereum activity. Scammers also find end-users more vulnerable to their influence, due to the exploitability of smart contracts, and the execution of the now common rug pulls in these platforms.

    Grand Theft Defi

    Ciphertrace also provided a list of the biggest scams and exploits that happened in the period. The biggest defi-related scam was the exploit of PAID network, which allowed hackers to mint $150 million worth of the currency. The project acknowledged the scam and pulled liquidity to mint another currency, but PAID lost more than 85% of its value, affecting all holders.

    Easyfi, a Polygon-based defi protocol, lost $80 million due to a security vulnerability that allowed hackers to steal the private keys of the wallet from the computer of a member of its team. Another significant hack (suspected to be a rug pull) was the one concerning Meerkat Finance, which took $31 million worth of BNB after the team modified the logic of its smart contract, writes

    These hacks and exploits will likely keep happening even at a higher scale due to the defi sector acquiring more and more relevance in the crypto industry in the future.

    We remind you that in March, Experts predicted a twofold increase in cryptocurrency fraud. Kaspersky Lab believes that in 2021 the damage from crimes with digital money could reach $ 4.5 billion.

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