Last year, the DeFi industry was the most vulnerable to scams and attacks, with cryptocurrency criminals stealing $1.9 billion in 2020, according to data from analytics firm CipherTrace.
In total, $1.9 billion in cryptocurrencies was stolen last 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 thefts”.
The operators of the massive WoToken fraud scheme stole $1.1 billion – the biggest cryptocurrency crime of the past year. The second and third places were occupied by criminal activity related to the hacking of the KuCoin exchange and the problems of the Fcoin platform.
According to analysts, projects in the decentralized finance industry (DeFi) were particularly vulnerable to theft last 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 scams in the second half of the year were related to decentralized financing projects. This is a trend that frighteningly resembles the ICO craze of 2017, ” said CipherTrace analysts.
As the number of crypto assets blocked in DeFi increases, the risks also increase. According to DeFi Pulse, the total value of crypto assets blocked in DeFi projects reached $26.1 billion, compared to about $10 billion in early November.
“The lost profit syndrome contributes to the rapid growth of DeFi projects. But industry participants lack due diligence, which exposes individual investors to significant risks, ” said Dave Jevans, CEO of CipherTrace. He added:
“When protocols are launched quickly to capitalize on the general hype, they put users at risk, who may fall victim to loopholes or bugs in the code discovered during 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.”
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.