Hackers Have Stolen $100 Million From Defi Projects This Year

Hackers have stolen $100 million from decentralized finance (Defi) projects so far this year, according to a new report. Defi accounted for 50% of all hacks and thefts in the second half of the year.

Defi Hacks on the Rise

A new report by cryptocurrency forensics and blockchain threat intelligence firm Ciphertrace shows that $100 million have been stolen from decentralized finance (Defi) this year. The company detailed on Monday:

In first six months of 2020, 45% of all thefts were Defi hacks, equating to about $51.5M — 40% of hacked volume for that time period. So far, in second half of 2020, Defi has dominated 50% of all thefts, equally roughly $47.7M — 14% of hacked volume for this time period.

The report explains that the low volume percentage in the second half of the year is due to the large Kucoin exchange hack of $281 million which occurred in October. Excluding the Kucoin incident, Defi amounted to more than 50% of the total theft and hack volume during the time period. “Despite Kucoin being a centralized exchange, even this hack had been touched by Defi as the criminals attempted to launder the stolen funds through one of the largest decentralized exchanges in the world — Uniswap,” the report adds.

So far, the total of Defi protocol and exchange hacks amounted to about 21% of the total hack and theft volume. By comparison, the Defi hack volume was nearly negligible in 2019. The report elaborates:

The USD value locked in Defi has grown exponentially in 2020 thus creating potential new money laundering risks as hacked Defi protocols make up the majority of crypto thefts in 2020 and decentralized exchanges were the ramp of choice for 2020’s Kucoin hack.

“This boom is ultimately what attracted criminal hackers to Defi, resulting in the most Defi hacks in a year to date,” the report continues.

According to Defi Pulse, the total value locked in Defi is currently $13.42 billion, which is an increase of almost 700% since the beginning of the year. Uniswap leads the pack, followed by Maker, Wbtc, Compound, Aave, and Curve Finance.

The U.S. Securities and Exchange Commission (SEC) and other global regulators are beginning to pay closer attention to Defi. “The EU has introduced Markets in Crypto-Assets (MiCA), a proposed regulation which, if passed, will ban decentralized exchanges from trading with any European Union citizens if they are not incorporated as a legal entity and have their registered office in a Member State,” the report detailed.

The Financial Action Task Force (FATF) already considers decentralized exchanges in its guidelines and the Financial Crimes Enforcement Network (FinCEN) applies the same regulatory consideration to DEXs as it does bitcoin ATMs.