Fraud and Scams

Mass-Scale Hacks Increased to $98 Million During 2020: What Could Have Caused This?

In the last ten months of 2020, damages from cryptocurrency hacks, thefts, and frauds have dipped a reasonable $1.8 billion compared to the previous year. But at the same, the crimes in the “decentralized finance” (DeFi) sector jumped.

Crypto crime reached $4.5 billion globally in 2019, as per the report from crypto intelligence company CipherTrace.

“What we have seen is that exchanges and other cryptocurrency players have implemented more security procedures,” Dave Jevans, CipherTrace’s chief executive officer, stated Reuters.

“THEY HAVE TAKEN THE GUIDANCE AND IMPLEMENTED THE PROCEDURES TO SECURE THEIR FUNDS BETTER. SO YOU’RE GOING TO SEE LESS MASS-SCALE HACKS.”

So far, in 2020, losses from thefts and hacks increased to $468 million, excluding fraud and misappropriation of funds. This is a jump of 30% from $361 million in the entire last year.

20% of these hacks, at around $98 million, belong to DeFi space, which currently has a record of $13 billion of total value locked (TVL), as per DeFi Pulse. The sector has grown by 1,825% since the beginning of this year.

The DeFi mania attracted criminal hackers to space, which resulted in the most hacks for the sector this year. In 2019, the DeFi hacks were negligible.
“Companies and individuals have rushed DeFi products to market that have not gone through security verification and validation,” said Jevans. “So people are figuring out that there’s a weakness here.”

After a crazy bull run in August that topped out the next month, this week, as Bitcoin’s price took a breather following its run-up to almost $16,000, DeFi tokens are yet again enjoying a hot rally.

Some of the blue-chip DeFi tokens are up 60% to over 100% this past week, as per Messari.

According to Jevans, because of these networks being permissionless by designs, they can quickly become a haven for money launderers.

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