The crypto market all through 2021 – 2022 recorded an impressive yet regrettable number of attacks and hacks on protocols. As a routine, Chainalysis has released the Crypto Crime Report for 2022.
According to the report, the crypto industry recorded the highest number of hacks ever to the tune of $3.8 billion. Further revelation from the report showed that a larger percentage of the stolen funds were taken from DeFi protocols and linked to the Lazarus Group.
Although protocols were exploited throughout the year 2022, the months of March and October had the highest spikes. The month of October had the largest hack ever recorded for a single month with $775.7 million stolen from 32 separate attacks while March had $732.4 million.
Hacks on Bridges
From 2016 through 2019, the attack on DeFi protocols went down but figures illustrated by Chainalysis highlighted that the hacks of 2021 were focused on DeFi protocols as seen in 2022. A broader look showed from 2019 to 2022, there was a sharp increase. For the period, 64% of the stolen $3.8 billion from hacks was done on DeFi protocols.
Hackers used Cross-chain bridges for their activities. One reason is that these bridges facilitate a lot of asset exchange, but there are loopholes that hackers exploited to make their transactions almost unnoticeable, Chainalysis said.
Lazarus Group stole more in 2022 than in 2021
Another data shown by Chainalysis is that the North Korea-linked community of hackers broke their theft record in 2021 from $428.8 million to $1.7 billion in 2022. This community of hackers has the notorious Lazarus Group as one of the most popular hacking crews in the world. The funds were mostly used for funding the government’s nuclear program development according to Chainalysis.
The report explained that one reason these cyber criminals make use of DeFi protocols is because it gives them access to “large quantities of illiquid tokens that aren’t listed at centralized exchanges”. These tokens which are not listed in centralized exchanges are less monitored and have little or no exposure to security organizations.
Beyond DeFi protocols – mixers
Chainalysis also noted that the North Korea-linked hackers also “tend to send large sums to mixers, which have typically been the cornerstone of their money laundering process”. A mixer is a platform that obfuscates the source of cryptocurrencies by commingling them while allowing the sender to receive their asset at a designated address.
For example, a user can send 4 BTC to a mixer. Once the 4 BTC gets into the mixer, it is combined with other cryptocurrencies to make it harder for the transaction to be traced. Then, the 4 BTC can be transferred to a preferred address. Criminals use mixers to be more anonymous while carrying out transactions on DeFi platforms.
According to Chainalysis, with the help of a popular mixer such as Tornado Cash, the North Korean hackers move stolen funds across DeFi protocols in 2022. However, they opted for a different mixer after Tornado Cash was sanctioned in 2022 by OFAC (Office of Foreign Assets Control).
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Crypto crimes higher in 2021; more hacks in 2022 – Chainalysis CEO
