Cyber criminals have stolen over $1.3 billion in the first quarter of 2022, according to a study done by German crypto publication, CryptoMonday.de.
The study also established that 97% of the funds were stolen from Decentralized Finance (DeFi) protocols, furthering a trend of rising theft in DeFi. In 2021’s first quarter, 72% of the stolen crypto was from DeFi protocols, which was also quite a jump from 2020’s 30% only.
Besides DeFi protocols, crypto enthusiasts had their assets stolen from exchanges and other private entities during the first 3 months of 2022.
According to Jonathan Merry, CEO, CryptoMonday:
“Hackers and cyber criminals made away with more that $3.2 billion last year and we just might have a higher amount being stolen this year, if the first quarter is anything to go by.
The need for tighter security measures grows by the day, especially since more people are coming aboard.”
– CEO, CryptoMonday
Why DeFi ?
The primary reason why DeFi protocols are vulnerable to crypto theft is that they rely largely on open source development.
While on one hand, this feature makes DeFi a lucrative venture for many crypto enthusiasts, anyone can access the smart code contracts and audit it for any errors – a process that makes the protocol trustable.
On the other hand, the open source nature also means that cyber criminals can leverage the protocols to their advantage. The report provides the example of the BadgerDAO hack in 2021 where a hacker studied the code and even tested it months before they struck.
The report notes several characteristics of DeFi theft:
Flash loan attacks and code exploits are the two types of faulty codes accounting for stolen crypto from DeFi protocols in the first quarter of 2022
Flash loan attacks made away with $364 million from DeFi platforms
Security breaches accounted for more than 50% of the cryptos stolen from DeFi protocols
According to the report, thieves transfer the stolen crypto to bitcoin mixers and high risk exchanges.
Centralized mixers are companies that will accept your bitcoin and send back different bitcoins for a fee.
Previously, centralized exchanges were a popular destination for hackers. However, this has been declining steadily over the years and now only accounts for less than 15% of the cryptos.
51% of the stolen funds last year was directed to DeFi platforms. Seeing as the year is already set for the start of DeFi-related thefts, we can only wait and see what else the year has in store.