Stolen cryptocurrencies hit a record $3.8 billion in 2022 as hacking activity persists

The value of stolen cryptocurrencies hit a record $3.8 billion in 2022 as hacking activity remained rampant, new research from Chainalysis has shown.

The figure is up more than 15% from the $3.3 billion recorded in 2021, and an almost eightfold increase from the $500 million in 2020, the blockchain company based in London said on Wednesday. New York.

Decentralized finance (DeFi), which experts say is a more secure way to handle financial transactions because it relies on the blockchain, was the top target for hackers in 2022, with the trend increasing steadily over the past four years due to its popularity, the report told me.

Victimized DeFi protocols in 2022 accounted for more than 82% of all stolen cryptocurrencies, up from around 73% the previous year, resulting in losses of around $3.1 billion, he said.

“DeFi is one of the most dynamic and compelling areas of the cryptocurrency ecosystem, largely due to its transparency,” said Kim Grauer, director of research at Chainalysis.

“But that same transparency is also what makes DeFi so vulnerable – hackers can scan DeFi code for vulnerabilities and strike at the perfect time to maximize their theft.”

The cryptocurrency industry has endured a period of continuous price decline since last year. Its market cap peaked at over $3 trillion in November 2021, but has since declined; On Thursday, it stood at around $1.1 trillion – a drop of nearly two-thirds – according to data from CoinMarketCap.

Last year was one of the most tumultuous in cryptocurrency history, with the implosion of several major crypto companies, including Celsius, Three Arrows Capital and, most importantly, FTX, which filed for bankruptcy. the 11th of November.

The stock market crash, once valued at $32 billion, has rattled the entire industry, dealing a blow to those advocating for the viability of digital currencies and drawing closer scrutiny from regulators on how they manage user assets.

Job losses have added to the industry’s woes. Last month, Coinbase, one of the world’s largest crypto platforms, said it was cutting 20% ​​of its workforce, its third round of cuts in eight months.

In 2022, stolen assets and hacking activity hovered on a monthly basis, with March and October recording the highest values ​​to date at $732.4 million and $775.7 million, respectively, according to the report. Chainalysis study.

Illegal activity in March was largely driven by the mobile game heist Axie Infinity, while October’s value, which recorded 32 attacks, rose due to hacks on BNB Chain and Mango Markets.

The Axie Infinity The heist was linked to hackers connected to North Korea, who continued to expand their illegal activity, resulting in cryptocurrency theft activity in 2022.

They were able to steal around $1.65 billion to break their own record for the highest value of stolen digital assets in a year, Chainalysis said.

That’s a nearly four-fold jump from the $429 million recorded in 2021 and significantly higher than the previous record high of $522 million in 2018, he said.

This activity is lucrative: as a reminder, the total exports of the isolated country amounted to 151 million dollars in 2021, according to data from Trading Economics.

“So it’s no exaggeration to say that cryptocurrency hacking is an important part of the national economy,” Chainalysis said.

After DeFi, centralized services were the second most targeted platform by cybercriminals, but by far, he said.

Centralized platforms – those through which digital assets are bought and sold through a third party – were top targets until 2020, but have declined significantly from last year as popularity of DeFi has exploded, the study showed.

Private platforms, token protocols and personal wallets now hold very marginal shares in the crypto hacking pie, he said.