- According to Chainalysis, these hacks have cost the industry an estimated $1.9 billion.
- Blockchain bridges, which are more vulnerable to attack, are well studied by hackers.
- The rise in criminal activities in the blockchain industry is taking place amid a shrinking crypto market.
Crypto thefts have skyrocketed this year as North Korea is targeting hacking attacks against DeFi targets in the West. North Korean hackers have discovered a soft spot in decentralized finance firms, given the blockchain research and analytics firm in its latest analysis.
The value of tokens stolen in hacks as of July 2022 amounted to $1.9 billion worth of crypto. This is 58% more than the hacking attacks recorded last year during the same period, notes a Chainalysis report.
“This trend doesn’t appear set to reverse any time soon, with a $190 million hack of cross-chain bridge Nomad and $5 million hack of several wallets already occurring in the first week of August,” the report states.
Most of these attacks have been against Cross-chain bridging. These protocols used for the transfer of cryptocurrencies through different blockchain networks are currently the weakest link in the blockchain.
“DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits,” the experts explain.
According to Chainalysis, hackers were able to more easily exploit these open source protocols, network bugs, and other vulnerabilities. “it’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices,” it adds.
Having become the preferred targets for North Korean hackers, DeFi companies are also the biggest losers this year. In addition to Nomad, Axie Infinity’s Ronin in March had a $600 million loss, then in June Harmony’s Horizon lost about $100 million.
The report also mentions that the increase in criminal activities in the blockchain industry has occurred amid a contraction in the cryptocurrency market. Although illegal transactions detected by Chainalysis fell 15% through July compared to 2021, legitimate transactions more than doubled, the report highlights.
On the Flipside
- Hacking of DeFi protocols is mostly sponsored by the North Korean socialist regime led by Kim Jong-un, the third ruler of the dynasty.
- According to research by Chainalysis so far this year, thefts committed by North Korean hackers are worth about $1 billion.
Why You Should Care
- The good news for crypto users is that while the criminal activity of hackers continues, other areas of the industry where other crimes such as scams have been recorded, show a significant decrease.
“This is especially encouraging in scams, where the decrease in market hype seems to mean fewer are fooled by scammers,” says Chainalysis. Also “in darknet markets, where law enforcement’s shutdown of Hydra Market appears to have dampened the entire sector,” adds the firm.
From January through July, cryptocurrency scams were worth about $1.6 billion, down 65% from 2021, the report noted. Likewise, in the so-called darknet markets, revenues have fallen by 43% so far this year, mainly due to the closure of the Hydra market in April.