Blockchain analyst firm Chainalysis published a new report focused on illicit activities occurring on blockchains, noting that DeFi protocols are the most popular targets that hackers tend to pursue and that money laundering in the space has increased in the space. the last two years.
DeFi as the main target of hackers
Since the DeFi boom in the summer of 2020, illicit DeFi transactions have been steadily increasing. Money laundering and DeFi hacking have been the top two criminal activities on such protocols, the Chainalysis report shows.
In total, perpetrators stole $1.7 billion worth of digital assets in 2022, with 97% coming from DeFi protocols. The stash came primarily from two alarming heists: the $600 million Ronin Bridge breach in late March and the $320 million Wormhole attack in February. The report highlighted that, as of 2022, the majority of the stolen funds, more than $840 million, went to hackers linked to North Korea.
In addition to hacking, money laundering done through DeFi has also grown steadily in recent years, with DeFi protocols absorbing 69% of cryptocurrency-based funds associated with criminal activity.
The report attributed the nature of most of these protocols, which allow users to exchange one token for another, to the difficulty of tracking the movement of digital assets. Additionally, the lack of KYC requirements for most DeFi projects has made them more attractive to criminals.
The report used the example of the notorious North Korea-linked Lazarus Group, which last year laundered $91 million worth of cryptocurrencies in various protocols. The group reportedly swapped stolen tokens into ETH and BTC, transferred them to accounts on centralized exchanges, and then cashed out the assets.
NFT wash trading
Another notable dismissal in the report focused on NFT Wash Trading, a form of market manipulation that artificially inflates an illiquid asset. Wallets controlled by the same entity can exchange NFTs with each other, giving market participants a misperception that the demand for the asset is higher than its actual level.
The report identified an example that has generated more than 650,000 wETH in transaction volume through manipulation. He claimed that the incidents occurred on the same platform because the market paid incentive rewards for trading NFTs in the form of the platform’s native token.
Users could earn additional tokens simply by transacting more frequently between accounts. Meanwhile, NFT collectors can be misled into believing that the market has more trading activity than it does.
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This post 97% of Crypto Hacks Were Against DeFi Projects: Report
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