- The first quarter of 2022 had cyber criminals steal $1.3 billion
- 97% of the stolen funds came from DeFi protocols
One of the biggest drawbacks associated with decentralized finance is that criminals are using the rapidly expanding technology for their dubious benefits. According to data recently compiled by CryptoMonday.de, the first quarter of 2022 had cyber criminals steal $1.3 billion, with 97% of this stemming from DeFi protocols.
It’s worth noting that the numbers signify a major spike. 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 the DeFi protocols, crypto enthusiasts had their assets stolen from exchanges and other private entities during the last three months.
“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,” says Jonathan Merry, CEO at CryptoMonday.
Faulty codes account for most thefts
DeFi protocols rely largely on open source development. On the 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.
Unfortunately, DeFi’s open source nature also means that cyber criminals can leverage the protocols to their advantage. An excellent example is the BadgerDAO hack last year, where the hacker studied the code and even tested it months before they struck.
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 this year. Last year, flash loan attacks made away with $364 million from DeFi platforms.
It is also worth mentioning that security breaches are also to blame for a large proportion of the stolen funds. These breaches accounted for more than 50% of the cryptos stolen from DeFi protocols. The most recent attack was on the Ronin Network, earlier this year, which saw $616 million stolen from the platform.
Where do the stolen funds end up?
Cyber criminals need a place to dispose of the stolen funds and according to our reports, a significant amount of the stolen assets ended up in risky services. These services include bitcoin mixers and high risk exchanges.
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 to quite the start for DeFi -related thefts, we can only wait and see what else the year has in store.