DeFi responsible for 97% of hacks 1

Chainalysis, a firm focused on the activities on blockchains has unveiled a new report looking into criminal activities in the crypto market. According to the on-chain analysis firm, most of the hacks carried out in the sector occurred in the Decentralized Finance market. Asides from the fact that money laundering activities have also skyrocketed, hackers are coming up with new ways to hit protocols in the decentralized finance sector.

Hackers stolen $1.7 billion in 2022

According to Chainalysis, the number of malicious activities in the decentralized finance sector has steadily risen since the massive surge that assets saw last two years. In its report, the Chainalysis claimed that while other malicious acts have gone nearly unnoticed in the sector, there has been an uptick in the hacking and laundering activities across the market. The report claims that in 2022 alone, malicious actors have hit the crypto sector, stealing more than $1.7 billion in crypto in total.

While thefts in other aspects make up for 3% of the entire value, about 97% of the thefts have occurred in the DeFi sector. Two major hacks were the most contributors to the figure; the Ronin hack, which saw hackers steal $600 million, and the Wormhole hack which saw the malicious actors a=cart away with about $320 million. The report also pointed out that the majority of the funds stolen across the market in 2022 have been tied to malicious actors operating out of North Korea. In putting it into perspective, the hackers are now sitting on a massive $840 million bounty.

Chainalysis report breakdown

Asides from hack activities which has encompassed the market, money laundering has also been another issue of concern. The Chainalysis report claims that hackers have passed more than 69% of stolen funds through different DeFi platforms in the market. According to the report, the swapping services in the market make it easy for traders to disguise the movement of stolen funds. Another feature that has helped them is the anonymity in the market with most platforms in the market opting not to subject their users to KYC requirements. A typical example is the Lazarus Group which specializes in hitting platforms to steal assets.

In the report, the group has laundered about $91 million across platforms last year. According to the report, the group would steal the assets and exchange them for some top assets before sending them to centralized platforms to be withdrawn. Asides from those, the issue of Wash Trading in the sector. A trader that is in control of different wallets can choose to end NFTs across both wallets making the market think the NFT is in massive demand. The report claims that a wallet generated more than 650,000 wETH using wash trading. This process ends up pushing NFT buyers to purchase arts that do not have worth in the market.