The increase comes even though the value of many cryptocurrencies fell in the first half of this year. The report attributed much of the increase to hacks on decentralized finance (DeFi) protocols. The term refers to services that attempt to replace traditional financial institutions with software that allows users to transact directly with each other via the blockchain, the digital ledger that underpins cryptocurrencies.
An estimated $1 billion has been stolen from DeFi protocols by North Korea-linked hackers so far this year, according to the Chainalysis report. These thefts are believed to be part of a wider strategy to help raise revenue for the North Korean regime as it has been largely cut off from the world.
DeFi transactions, mainly based on Ethereum blockchain technology, have rapidly exploded in popularity over the past two years. These protocols are “uniquely vulnerable to hacking” thanks to their open source code, large amount of assets and rapid growth that may have led to a lapse in security best practices, according to Elliptic, a blockchain analytics firm.
“The technology is relatively immature in general. This space has only really emerged in the last couple of years,” Tom Robinson, chief scientist at Elliptic, told CNN Business. “Mistakes are made, mistakes are learned, but there are always mistakes in the software. I think the problem here is that the software is the only thing that secures these resources.”
Chainalysis warns that the rise in crypto theft shows no sign of letting up despite the fall in the crypto market. “As long as cryptoassets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them,” according to the report.
