Crypto Hackers Stole Billions; why it is a growing problem

Hackers have already stolen nearly $2 billion worth of cryptocurrency in 2022 – and the year is only half over.

As of July, $1.9 billion in crypto has been stolen by cybercriminal hacks, according to Chainalysis’ “Mid-year Crypto Crime Update.”

By this time last year, hackers had stolen $1.2 billion, according to the report. This is an increase of almost 60% compared to a year ago.

“Despite the misconception that cryptocurrency is anonymous, it’s still easier to run away with coins or tokens,” says Max Krupyshev, co-founder and head of crypto payment ecosystem CoinsPaid. “I don’t think that crypto-hackers are stronger than the ‘regular’ types, it’s just that crypto-platforms are new and have valuable assets.”

Bad actors are increasingly targeting decentralized finance (DeFi) protocols, which are uniquely vulnerable to hacking, according to the report. DeFi programs are the underlying blockchain technology that allows financial transactions to take place outside of traditional banks. These programs primarily use the Ethereum blockchain.

DeFi programs are public and use open source, which can be useful because it usually allows security issues to be discovered and fixed quickly.

But since open source code is available for anyone to look at, cybercriminals are able to study the code thoroughly and find vulnerabilities that can be exploited and used to steal crypto funds, according to the report.

And hackers aren’t likely to stop anytime soon. They have already stolen $190 million from crypto startup Nomad and $5 million from several Solana digital wallets during the first week of August, Chainalysis reports.

“The only way to stop them is for the industry to strengthen security and educate consumers on how to find safe projects to invest in,” the report recommends.

There are many virtual wallets that can safely store crypto and secure it against online attacks, says Krupyshev. However, it’s important to do thorough research first to determine which type of wallet makes sense for you.

It is also crucial to do your own research before investing in anything to avoid potential scams.

There are “false opportunities and Ponzi [schemes] shining with their neon lights everywhere,” warns Krupyshev. “No safe wallet can save a young investor from them.”

In addition, law enforcement must continue to develop their ability to seize stolen cryptocurrency so that hacks are no longer attractive to cybercriminals, Chainalysis reports.

Although many investors are attracted to the unregulated nature of cryptocurrency, the lack of a central regulatory authority means that investors typically do not have the same protections offered by traditional financial institutions such as banks.

And remember, cryptoassets can be highly volatile and subject to wild price valuations. There is no guarantee of a return on your investment, which is why experts recommend only investing as much as you are prepared to lose.

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