Over three-quarters of crypto hacks this year have occurred in decentralized finance (DeFi), according to a study by crypto intelligence firm CipherTrace.
- DeFi-related hacks made up 76% of major hack volume in the crypto arena this year as of the end of July, CipherTrace's "Cryptocurrency Crime and Anti-Money Laundering Report" concluded.
- That works out at some $361 million, 2.7 times more than in 2020.
- According to CipherTrace's report, DeFi-related fraud made up 54% of major crypto fraud, up from just 3% in 2020.
- An attack today on DeFi platform Poly Network that may have drained $600 million is a notable example of this trend.
- Crypto crime in general, however, is declining compared with previous years. It totaled $4.5 billion in 2019, $1.9 billion in 2020 and dropped to $681 million in the first seven months of 2021.
- Another major finding of the the report concerns the implementation of the cryptocurrency "travel rule." The Financial Action Task Force (FATF), an intergovernmental body for preventing money laundering and terror financing, said not a single crypto service provider in any jurisdiction was fully compliant with the rule, which states that the sender and recipient of crypto funds must be properly identified.
- CipherTrace released a tool in March designed to tackle fraud in this area by scanning addresses associated with incoming crypto transactions. Binance tapped CipherTrace's tool in July to aid its travel-rule compliance.
UPDATE (AUG. 10, 15:24 UTC): Adds attack on Poly Network
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