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Losses from cryptocurrency theft, hacks and fraud dropped to $ 1.8 billion for the first 10 months of the year compared to last year, but according to a report by crypto intelligence firm CipherTrace, crime in the hot ” decentralized finance “has increased.
FILE PHOTO: The exchange rates of Bitcoin, Ether, Litecoin and Bitcoin Cash are seen on the display of a cryptocurrency ATM at the headquarters of the Swiss Falcon Private Bank in Zurich
NEW YORK: Losses from cryptocurrency theft, hacks and fraud fell to $ 1.8 billion for the first 10 months of the year compared to last year, but crime in the hot “decentralized finance” sector has increased, according to a report from crypto intelligence firm CipherTrace.
Crypto crime hit $ 4.5 billion globally in 2019.
“What we have seen is that exchanges and other cryptocurrency players have implemented more security procedures,” Dave Jevans, chief executive of CipherTrace, told Reuters.
“They’ve taken the lead and implemented procedures to better protect their funds. So you’ll see fewer large-scale hacks.”
So far this year, losses from theft and hacks, excluding embezzlement and fraud, have grown to $ 468 million at the end of October, a 30 percent increase from $ 361 million for the full year, the report said. CipherTrace. About 20% of these hacks, or roughly $ 98 million, came from “decentralized finance” or DeFi, which are transactions on platforms that facilitate lending outside of banks.
The total number of loans on DeFi platforms was $ 12.6 billion at the end of Monday, data from industry site DeFi Pulse showed, up more than 200% from about $ 4 billion in August. . DeFi sites run on an open infrastructure, with algorithms setting rates in real time based on supply and demand.
The surge in DeFi was what ultimately attracted the criminal hackers, causing the most hacks for the industry this year.
In 2019, DeFi hacks were practically negligible, CipherTrace said.
“Companies and individuals have brought DeFi products to market that have not undergone security verification and validation,” said Jevans. “So people are finding that there is a weakness here.”
With DeFi networks lacking design permission, meaning they often lack clear regulatory compliance, anyone in any country is able to access them without customer verification obstacles involved.
As a result, Jevans said DeFi can easily become a haven for money launderers.
(Reporting by Gertrude Chavez-Dreyfuss in New York; Editing by Matthew Lewis)
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