£1.6 billion in cryptocurrency stolen as hackers exploit coding flaws

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record £1.6 billion worth of cryptocurrency has been stolen in hacks of services in the year to July 2022 as organised online criminals and nefarious state actors exploit vulnerabilities in decentralised finance.

The sums are around 60% higher than for the same period a year ago, according to data from blockchain platform Chainalysis, and stand in stark contrast to overall criminal activity online, which is down 15%, and online scam revenue, which fell 65%.

Hundreds of millions dollars more have already been stolen from digital wallets since the start of August alone. Hackers took some £150 million from crypto project Nomad Bridge at the start of the month, while a further £6 million was taken from 8,000 wallets held with Solana.

Kim Grauer, director of research at Chainalysis, told the Standard crypto scams have fallen because of falling retail investor activity amid dwindling Bitcoin prices and because “law enforcement have really picked up on the amount of activity to protect people from scams.

Hacking on the other hand is going crazy — this has to do with all the vulnerabilities associated with DeFi [decentralised finance], and the fact that we have these really sophisticated nation state actors like North Korea realising they can make billions of dollars looking for badly written protocols to exploit.”

DeFi protocols are uniquely vulnerable to hacking, according to Chainalysis, as their code is open source, meaning it can be interrogated by any member of the public and examined for flaws. North Korea-affiliated groups have stolen at least £800 million worth of crypto currency through exploiting imperfect DeFi protocols.

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