FBI: DeFi is full of vulnerabilities

The FBI has issued a warning to cryptocurrency investors about how cybercriminals are getting better and better at exploiting the vulnerability of DeFi platforms to steal cryptocurrencies.

FBI and warning cryptocurrency investors about vulnerabilities in DeFi platforms

The Federal Bureau of Investigation (or FBI), the U.S. National Intelligence and Security Service, has issued an alert to cryptocurrency investors. 

The #FBI warns that cyber criminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal investors cryptocurrency. If you think you are the victim of this, contact your local FBI field office or IC3. Learn more: https://t.co/fboL1N17JN pic.twitter.com/VKdbpbmEU1

— FBI (@FBI) August 29, 2022

“The FBI warns that cybercriminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal investors’ cryptocurrency. If you think you are the victim of this, contact your local FBI field office or IC3.”

This is a public announcement through which the FBI wants to be supportive of cryptocurrency investors who somehow feel victimized or threatened by cyber criminals in DeFi. The invitation is to contact them through the Internet Crime Complaint Center or the local FBI office.

Apparently, there are so many smart contract vulnerabilities in the Decentralized Finance sector that cybercriminals are ready to take advantage of them to steal cryptocurrencies. 

FBI and how cybercriminals are defrauding in DeFi

Continuing with its announcement, the FBI highlights how between January and March 2022 alone the equivalent of $1.3 billion in cryptocurrencies was stolen. 97% of this amount was stolen through DeFi platforms. 

A number destined to grow given its history. And in fact, in 2021 it was 72% and in 2020 only 30%. 

Not only that, but the FBI also describes some fraud patterns that have occurred by cybercriminals with DeFi platforms: 

• a theft from project investors and developers of about $3 million in cryptocurrency for initiating a flash loan that triggered an exploit in the DeFi platform’s smart contracts;
• losses of about $320 million for exploiting a signature verification vulnerability in the DeFi platform’s token bridge, withdrawing all of the platform’s investments; 
• another approximately $35 million in cryptocurrencies was stolen by manipulating cryptocurrency price pairs by exploiting several vulnerabilities, including the DeFi platform’s use of a single price oracle, and then conducting leveraged trades that circumvented slippage controls and benefited from pricing miscalculations

The slow descent of Decentralized Finance values.

Last month it was stated how since its peak in May 2021, decentralized finance has seen its market values begin a slow descent. 

Based on the CoinShares report, it appears, in fact, that the second quarter of 2022 was the worst for DeFi tokens. The prices of the best projects have, in fact, fallen more than 65% on average against the U.S. dollar. 

DeFi’s TVL (Total Value Locked) fell in the second quarter of 2022 to $70 billion, and that is 70% less than the $230 billion in April 2022. 

This’s still a declining figure since at the time of writing, DeFi’s TVL is $60 billion.