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Chainalysis Says Losses Due To Cryptocurrency Breaches Rose By 60% Between January And July, Totaling $1.9 Billion


Chainalysis Says  Losses Due To Cryptocurrency Breaches Rose By 60% Between January And July, Totaling $1.9 Billion
Losses from cryptocurrency thefts increased by nearly 60 per cent in the first seven months of the year to $1.9 billion, fueled by a surge in cash stolen from decentralised finance (DeFi) protocols, according to a blog post published on Tuesday by blockchain analysis firm Chainalysis.
The stolen funds from hackers totalled $1.2 billion over the same period last year.
DeFi applications are financial systems that enable crypto-denominated lending outside of traditional banks, many of which operate on the Ethereum blockchain.
Given the $190 million attack of cross-chain bridge Nomad and the $5 million hack of numerous Solana wallets in the first week of August, Chainalysis believes the trend is unlikely to change anytime soon.
"DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits and it's possible that protocols' incentives to reach the market and grow quickly lead to lapses in security best practices," Chainalysis said in the blog.
According to the US business, much of the money taken using DeFi protocols may be traced back to "bad actors" associated with North Korea, particularly elite hacking organisations like Lazarus Group.
According to Chainalysis, North Korean-affiliated groups have stolen nearly $1 billion in cryptocurrencies from DeFi protocols this year.
In terms of crypto frauds, the blockchain intelligence firm reported a 65% drop through July, coinciding with the drop in digital asset values. Total scam revenue was $1.6 billion in the year to July, down 65% from roughly $4.46 billion in the same period last year.
Scammers may pose as reputable firms and provide bogus cryptocurrency coins or tokens.
"Scams are down primarily because of the crypto downturn, but also because of the many law enforcement wins taken against scammers and the product solutions that exchanges can use to fight scamming," said Kim Grauer, Chainalysis' director of research, in an email to Reuters.
According to CoinGecko, the crypto market capitalisation was $1.1 trillion late Thursday, down more than 50% from roughly $2.35 trillion at the start of the year. Bitcoin's price has dropped around 48% this year, hovering between $20,000 and $24,000 in recent months.
According to Chainalysis, scam-related revenues have declined in accordance with the price of bitcoin since January 2022. Not only did scam proceeds plummet, but the total number of individual transfers to schemes in 2022 was the lowest in the previous four years.
"Those numbers suggest that fewer people than ever are falling for cryptocurrency scams," Chainalysis said in the report.
"One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims."