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Despite their crash this year, cryptocurrencies are a digital cash cow for one influential group: hackers. The total amount taken thus far in October is at least $718 million, pushing the total for the year beyond $3 billion. Additionally, according to blockchain expert Chainalysis Inc., 2022 is on track to set a record for the overall value of hacks.
Most of the targets are protocols for so-called decentralised finance or DeFi. This uses computer-based algorithms to let cryptocurrency investors trade, borrow, and lend money on digital ledgers without the help of a central middleman.
A record year for crypto hacking, NFT projects under investigation
Hackers have been good at finding and taking advantage of holes in the coding, security, and organisation of DeFi marketplaces. DeFi is regarded as crucial for the adoption of cryptocurrencies, which puts the onus on crypto players to provide solutions. In 2022, “October is now the biggest month” for hacker activities. This was stated on Thursday on Twitter by Chainalysis, who also noted that bridges between blockchains represent a significant weakness.
Two significant exploits have just shaken up the crypto industry. One involved a hacker who stole around $100 million from the DeFi service Mango by influencing the token’s price. The criminal destroyed all of the platform’s depositors in the process.
Last week, a hacker effectively produced and took 2 million Binance Coins, or around $570 million. A statement from Binance claims that the remaining money was blocked and that just about $100 million was not recovered. Governments are increasingly hacking DeFi platforms. Chainalysis predicted earlier this year that organisations connected to North Korea had taken almost $1 billion in cryptocurrency from DeFi protocols.