The US Justice Department’s top crypto cop said that it was a “pretty significant issue” given the rise of North Korean “state-sponsored hackers.”
The United States Justice Department’s crypto enforcement team is cracking down on Decentralized Finance (DeFi) hackers and exploiters, amid a four-year rise in illicit crypto activity.
In a Financial Times report published on May 15, Eun Young Choi, director of the U.S. Department of Justice (DOJ) national cryptocurrency enforcement team (NCET), stated that the department is focusing on thefts and hacks involving DeFi and “particularly chain bridges.”
Choi said it was a “pretty significant issue” for the DOJ given North Korean “state-sponsored hackers” have emerged as “key actors in this space.”
North Korean hackers stole an estimated range of between $630 million to more than $1 billion of crypto assets in 2022, Cointelegraph reported in February.
The DOJ announced Choi – a prosecutor with nearly a decade of experience in the DOJ — as the first director of the NCET in February 2022.
At the time, a statement from the department explained that the NCET will serve as a “focal point” for the DoJ in tackling cryptocurrency, cybercrime, money laundering, and forfeiture.
Justice Department Announces First Director of National Cryptocurrency Enforcement Teamhttps://t.co/PvJ6iRDQ8P
— Justice Department (@TheJusticeDept) February 17, 2022
While the DOJ highlighted that “mixing and tumbling services” would be a particular focus for the agency, it did not specifically mention anything in regard to DeFi platforms at the time.
Choi, who also recently spoke at the Financial Times Crypto and Digital Assets Summit, reaffirmed that the DOJ is after crypto firms that either commit the crime or turn a blind eye to “obscure the trail of transactions.” She noted:
“The DoJ is targeting companies that commit crimes themselves or allow them to happen, such as enabling money laundering.”
She explained that by going after the source, the platform itself, it will have a “multiplier effect” in terms of stopping “criminal actors to easily profit from their crimes.”
Choi further emphasized the “scale and the scope of digital assets being used in a variety of illicit ways” has grown significantly over the last four years.
DeFi platforms have experienced a string of attacks in recent times.
The biggest DeFi hack so far this year was reported on March 13, with Euler Finance facing a flash loan attack with over $196 million in DAI, USDC, staked Ether (StETH) and Wrapped Bitcoin (WBTC) stolen.
Meanwhile, in November 2022 DeFi trading platform Mango Markets saw an exploiter allegedly take advantage of their low liquidity to “drain funds.”
Essentially the hacker deposited $5 million of his own money into the platform to drive up the price of MNGO from $0.03 to $0.91 to increase their MNGO holdings to $423 million.
From there, the exploiter was able to acquire a loan for $116 million using several tokens on the platform, including Bitcoin (BTC), Solana (SOL) and Serum (SRM), as a result, the loan eliminated the entire liquidity of Mango Markets.