Blockchain analysis firm Chainalysis published its mid-year report revealing that the number of crypto hacks increased compared to the number of crypto scams since last year.
According to the report, the total scam revenue for 2022 is currently $1.6 billion, which is 65% less than it was through the end of July 2021. This reduction appears to be a result of falling rates for various cryptocurrencies.
Revenue from scams has decreased in accordance with the Bitcoin price from January 2022. The number of people who became victims of scams thus far in 2022 is at its lowest point “in the last four years.”
Chainalysis estimates that the industry lost $1.9 billion in hacks from January to July of this year, meaning the number of cryptocurrency heists is up 60% this year. This is an increase from the $1.2 billion in hacks reported the year before.
“No area of cryptocurrency-based crime is bucking the 2022 trend of declining revenue like stolen funds,” the blockchain analytics firm stated.
Seeing the number of crypto hacks that have happened this year, it is bound to rise in the future too. Just in August’s first week, Nomad suffered an exploit attack that drained its entire fund with nearly $200 million worth of cryptocurrencies.
Following that, the Solana ecosystem took a hit in a multi-million dollar attack. Funds were drained from Phantom, Slope, and Trust wallets containing SOL, and SPL (USDC).
Chainalysis notes that the number of hacks rising is largely focused on funds from DeFi protocols, “a trend that began in 2021”. DeFi protocols are particularly susceptible to hacking because hackers can easily study their open-source code to find vulnerabilities.
The firm adds that North Korean-affiliated groups like Lazarus, are responsible for hacks via DeFi protocols who utilized Tornado Cash to wash out stolen funds. Entities connected to North Korea have stolen $1 billion or so worth of cryptocurrencies from DeFi protocols so far in 2022.
Also Read: Why did U.S. OFAC Sanction Tornado Cash?
Chainalysis believes that crypto hacks will not decrease in response to changes in the cryptocurrency market the way scamming does; as long as the crypto assets housed in DeFi protocol pools are susceptible to theft, the hacker will attempt to take them.
The only way to stop them is for the sector to strengthen security and inform consumers on how to pick safe projects. Meanwhile, law enforcement must keep improving their capacity to seize stolen cryptocurrencies until hacks are no longer profitable, says Chainalysis.
The report states “Nobody likes a crypto bear market, but the one silver lining is that illicit cryptocurrency activity has fallen along with legitimate activity, albeit not as sharply. The public and private sectors must continue to work together and hone their ability to fight cryptocurrency-based crime.”
