A recent report from blockchain network analysis firm Chainalysis stated that $1.9 billion worth of cryptocurrency was stolen through hacking of various services in the first seven months of 2022, and this is an increase of 60% over the same period in 2021.
According to Arab Net, the rise comes even with the decline in the value of many cryptocurrencies in the first half of this year.
The report attributed much of the rise to hacking of decentralized finance (DeFi) protocols. The term refers to services that attempt to replace traditional financial institutions with software that allows users to transact directly with each other via blockchain or the blockchain, the digital ledger that supports cryptocurrencies.
Some of the biggest crypto hacks of 2022 were on DeFi protocols, including Ronin's $625 million hack of the video game Axie Infinity in March. Some of these thefts, including the Axie incident, have since been attributed to hackers linked to North Korea.
An estimated $1 billion in DeFi protocols have been stolen by North Korean hackers so far this year, according to a Chainalysis report. The thefts are also believed to be part of a broader strategy to help generate revenue for the North Korean regime, which has been largely isolated from the world.
DeFi transactions, which are primarily based on the Ethereum network, have grown rapidly over the past two years. These protocols are uniquely vulnerable to hacking thanks to their open source code, large pools of assets and rapid growth that may have led to a breakdown in security best practices, according to Elliptic, another blockchain analysis firm.
Elliptic chief scientist Tom Robinson told CNN Business: The technology is generally relatively immature. This field has only really emerged in the past two years. Mistakes are made, mistakes are learned, but there are always errors in software. I think the problem here is that the program is the only thing that secures these assets, according to what Al Arabiya.net has seen.
The Chainalysis report warned that the increase in crypto thefts shows no sign of giving up despite the decline in the cryptocurrency market.
The report cited two recent large-scale DeFi hacks, including $190 million allegedly stolen from crypto bridge provider Nomad.
