- A CipherTrace report has found that crypto crime in general is down compared to last year, but DeFi crime is up
- DeFi crime now accounts for 20% of all crypto thefts and hacks
- DeFi is targeted because of its lax security and lack of KYC/AML
Cryptocurrency crime is down compared to last year but DeFi crime is on the increase, according to blockchain analysts CipherTrace. The company has released a report on the state of crypto crime which says that losses from cryptocurrency thefts, hacks, and associated activities declined to $1.8 billion compared to January to October last year, but that crimes perpetrated against DeFi entities are on the increase.
Centralized Services Have Upped Their Security Game
The CipherTrace report is not yet publicly available, but Dave Jevans, CipherTrace’s chief executive officer, explained the key findings to Reuters. Jevans puts the decrease in overall crypto crime down to an increased awareness and more robust security procedures by centralized exchanges, saying that they have “taken the guidance and implemented the procedures to secure their funds better”. This, he says, will result in “less mass-scale hacks”.
The picture isn’t so rosy however when misappropriation of funds and fraud are taken out of the equation – losses from thefts and hacks alone have grown to $468 million, up 30% from $361 million for the whole of last year. CipherTrace says that 20% of these hacks are down to attacks on the DeFi sector, which has exploded this year, with hackers finding more joy in exploiting decentralized systems than centralized ones.
CipherTrace: DeFi Crime Will Only Increase
The reason why hackers have switched to targeting DeFi platforms is because the security is much more lax, yet there is still a total of $13 billion worth of cryptocurrency sloshing around inside them. This combination of poor security and rich rewards makes them a very tempting quarry, to which Jevans attests:
Companies and individuals have rushed DeFi products to market that have not gone through security verification and validation. So people are figuring out that there’s a weakness here.
CipherTrace reports that as the DeFi space continues to grow, there is a good chance that DeFi crime might soon outpace attacks on centralized crypto entities, both because of the relative ease of carrying out a successful attack and the lack of KYC/AML on DeFi platforms when making a getaway.
