Crypto crimes decreased, but DeFi hacks are on the rise

Crypto crime has slowed in 2020, but some sectors within the crypto industry have become a new hotbed for criminal activity.

Citing major cryptocurrency analytics firm CipherTrace, Reuters reported that total losses from crypto theft, hacks and fraud dropped from $4.4 billion in 2019 to $1.8 billion in the first ten months of 2020.

Dave Jevans, CipherTrace CEO, said that the general decline in criminal activity in the cryptocurrency industry is the result of increased security measures. Exchanges and other crypto players have taken the guide and implemented the procedures to secure their funds better. So we see fewer large-scale hacks.

Despite a significant decline in crypto crime this year, CipherTrace reported notable growth in decentralized finance, or DeFi, hacking incidents. While DeFi hacks were almost negligible in 2019, they now account for 20% of crypto losses from thefts and hacks, CipherTrace analysts found. The rise of DeFi was what ultimately attracted criminal hackers, resulting in the most attacks for the industry this year.

Jevans said the DeFi industry has also become a money launderer’s paradise. DeFi projects often lack the security verification tools of centralized projects. Companies and individuals have been rushing to bring DeFi products to market that have not undergone security verification and validation. So people are realizing that there is a weakness here, Jevans stated.

CipherTrace confirms earlier reports that cryptocurrencies hacks have declined in 2020. In late October, Atlas VPN, the VPN provider, published a study stating that the number of hacks related to blockchain in the first half of 2020 is reduced more than three times compared to the same period in 2019.

Crypto-Related Fraud and Theft Resulted in $4.4 Billion Loss in 2019

According to a report from CipherTrace, in 2019, the total volume of fraud and theft related to cryptocurrencies resulted in losses worth $4.4 billion.

The amount of cryptocurrency and blockchain-related hacks has been decreasing throughout 2020.

According to Atlas VPN, 2019 was a record year for blockchain hackers. They completed 94 successful attacks in the 1st half of the year, while in the first half of 2020 there were 31. During 2019 as a whole there were 133 successful attacks on blockchain networks.

The company states that 2020 will not reach the record heights of last year, and blockchain hacks will continue to decline.

Since 2009, hackers have stolen $13.6 billion through 330 blockchain-related hacks.