July 2, 2022
  • July 2, 2022

Cryptocurrency Crime Declines But DeFi Fraud Soars: CipherTrace

By on May 14, 2021 0

Losses due to cryptocurrency theft, hacks, and fraud fell sharply in the first four months of the year, but crime in the burgeoning “decentralized finance” space hit a low. record, one report from crypto intelligence firm CipherTrace showed Thursday.

DeFi apps are platforms that facilitate crypto lending outside of traditional banks, using open source code with algorithms that set rates in real time based on supply and demand. Many DeFi applications are integrated into the Ethereum blockchain.

Globally, crypto-criminals fled with $ 432 million at the end of April, according to the CipherTrace report. About 56% of that, or $ 240 million, was related to DeFi, a record high.

For 2020 as a whole, losses in the crypto industry due to fraud and crime amounted to $ 1.9 billion. In 2019, crypto-crime losses hit a record $ 4.5 billion.

Cryptocurrencies are in the spotlight again with the prices soaring for the second largest token, ethereum, and social media darling, dogecoin.

The decline in crypto crime reflects a certain maturation in the industry, as infrastructure has improved and businesses and exchanges have strengthened security systems.

DeFi, however, is another story. The locked-in value – the total number of loans on DeFi platforms – was $ 86 billion on Wednesday, according to DeFi Pulse data, up about 650% from $ 11 billion in October.

The surge in industry growth has attracted the wrong players, and market players have said that the rise in crime is likely to accelerate as DeFi expands further.

“As more and more money flows into the space of retail and institutional players, the bad players will look to take advantage of the hype to lure people into scams and hackers will look for schemes. who embarked on without performing adequate security audits, exploiting loopholes encoded in smart contracts, ”said Dave Jevans, CEO of CipherTrace, in an email response to Reuters.

Losses from DeFi-related hacks have already exceeded the $ 129 million levied for all of 2020. In 2019, no DeFi losses were reported.

One of the major losses in the DeFi space was the $ 80 million in funds stolen on April 19 from EasyFi Network, a DeFi project on the Polygon network, according to the CipherTrace report. EasyFi reported that a hacker stole around $ 80 million in funds from his wallet.

(Report by Gertrude Chavez-Dreyfuss in New York edited by Alden Bentley and Matthew Lewis)

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