According to analyst firm CipherTrace, the DeFi industry was the most vulnerable to scams and attacks last year - cryptocurrency criminals stole $1.9 billion in 2020.
In total, $1.9 billion in cryptocurrencies were stolen over the past year. This is less than $4.5 billion in 2019 and more than $1.7 billion in 2018. Most of the criminal activity falls under the general category of “fraud and misappropriation”. The second most popular category was “break-ins and theft”.
The operators of the massive WoToken scam stole $1.1 billion in the largest cryptocurrency crime of the past year. The second and third places were taken by criminal activities related to the hacking of the KUCOIN exchange and the problems of the Fcoin platform.
Decentralized finance (DeFi) industry projects were particularly vulnerable to theft in the past year. At the same time, fraud, when attackers siphon liquidity from the protocol, depriving investors of the opportunity to trade, was especially common.
“Half of all cryptocurrency-related hacks in 2020 affected DeFi protocols. Almost 99% of the scams in the second half of the year were related to decentralized finance projects. This is a trend that is eerily reminiscent of the 2017 ICO craze”, CipherTrace analysts said
As the number of crypto assets blocked on DeFi grows, the risks also increase. The total value of blocked crypto assets in DeFi projects has reached $26.1 billion, up from about $10 billion in early November.
“Lost Profit Syndrome is driving the rapid growth of DeFi projects. But the industry lacks due diligence, which exposes individual investors to significant risks”, said CipherTrace CEO Dave Jevans
“When protocols launch quickly to capitalize on the hype, they put users at risk, who could fall prey to loopholes or code bugs found in an in-depth security audit. With billions of dollars flowing into DeFi, more hacks, scams and various crimes related to decentralized finance protocols can be expected in 2021”, he added
CipherTrace has included Pickle Finance, Harvest Finance, Bisq, and others in the list of DeFi protocols and trading mechanisms that have been hacked and attacked in the past year.
