Cybercriminals stole nearly $4 billion in cryptocurrencies last year

Hackers stole a record $3.8 billion worth of cryptocurrency globally last year, led by thieves linked to North Korea, according to a blockchain analytics firm that tracks cybercrime.

Chainalysis researchers called 2022 “the most important year ever for cryptocurrency hacking” in a report released last week. Thefts were up from the $3.3 billion stolen in 2021, the company said. Separately, a confidential report from the United Nations found that North Korea stole more cryptocurrency assets last year than in any other year, Reuters reported on Monday.

During the coronavirus pandemic, US investors have poured millions into bitcoin, ether, dogecoin and other popular tokens in hopes of generating a fortune. But some investors have instead suffered losses to hackers, with their digital wallets looted on platforms with poor cyber security.

North Korean cybercriminals “broke their own annual record for most stolen cryptocurrencies” and totaled $1.7 billion in thefts in 2022, according to Chainalysis’ report.

Given that North Korea’s total exports in 2020 amounted to $142 million, “it is no exaggeration to say that cryptocurrency hacking is a sizable part of the nation’s economy,” the researchers added.

As more and more investors have lost money to cryptocurrencies, US lawmakers have reignited their calls to regulate the cryptocurrency industry. The industry’s scrutiny became even more intense in November when FTX Trading, the third largest cryptocurrency platform, suddenly collapsed and filed for bankruptcy.

The number of crypto hacks “ebbed and flowed” in 2022 with sharp spikes in March and October, Chainalysis said. October was “the biggest month ever for cryptocurrency hacking” with 32 attacks totaling $775.7 million lost, according to the report.

Hackers have focused their activities on decentralized finance platforms, or DeFi, which were linked to 82% of stolen funds last year, Chainalysis said. Criminals typically strike when cryptocurrency investors use a so-called “cross-chain bridge” to transfer funds from one blockchain to another.

October’s biggest hack occurred when someone looted $586 million worth of cryptocurrencies from a Binance-owned cross-chain bridge. The company acknowledged the hack and said its security officers “were able to minimize the loss.”

Bad actors may exploit DeFi platforms because some crypto firms have not prioritized security, said David Schwed, chief operating officer of blockchain security firm Halborn.

“A large protocol should have 10 to 15 people on the security team, each with a specific area of ​​expertise,” Schwed said in the Chainalysis report. “The DeFi community typically doesn’t demand more security – they want to move to high-yield protocols. But those incentives lead to problems down the road.”

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