The global cryptocurrency market suffered losses worth $3.8 billion due to hacking activities last year, with North Korean-tied hackers being the primary culprits, according to a report by blockchain analytics firm Chainalysis. The report stated that 2022 was "the biggest year ever for crypto hacking" and saw a rise in theft from $3.3 billion in 2021.
Meanwhile, a confidential United Nations report disclosed that North Korea's crypto asset theft reached an all-time high last year. The increase in theft came as U.S. investors flocked to popular tokens such as Bitcoin and Ethereum during the COVID-19 pandemic, resulting in some investors losing their digital assets due to poor cybersecurity measures.
According to a report by Chainalysis, in the past, hackers targeted cryptocurrency exchanges, but these companies have since improved their security measures. As a result, hackers have shifted their focus to attacking "cross-chain bridges," which allow for the transfer of digital assets and data across different blockchains.
North Korean cybercriminals accounted for $1.7 billion of the total stolen amount. Given North Korea's total exports in 2020 were $142 million, the researchers stated that cryptocurrency hacking constitutes a significant portion of the nation's economy. The surge in crypto losses has led to renewed calls by U.S. lawmakers to regulate the industry, which was further intensified by the sudden collapse and bankruptcy of FTX Trading, the third largest crypto platform, in November.
The frequency of cryptocurrency hacking incidents showed fluctuations in 2022, with major spikes in March and October, according to a report by Chainalysis. In October, 32 attacks took place, leading to the loss of $775.7 million, the largest single-month loss ever recorded in the crypto industry.
Decentralized finance (DeFi) platforms were the main targets of these hacks, with 82% of stolen funds linked to these platforms, according to the report. Hackers often exploit weaknesses in cross-chain bridges used to transfer funds from one blockchain to another. The largest attack in October involved the theft of $586 million in crypto from a cross-chain bridge owned by Binance, which acknowledged the hack and stated that its security team was able to minimize the loss.
Due to inadequate security measures, DeFi platforms are vulnerable to exploitation by malicious actors, noted David Schwed, the Chief Operating Officer of blockchain security firm Halborn. According to Schwed, large protocols should have a security team of 10 to 15 individuals with specific areas of expertise. However, the DeFi community tends to prioritize high yields over better security, which may lead to problems in the future.
Impersonation is another form of scam that is taking over Twitter, with fake accounts and fake giveaways are continuously being hosted.
At one point, this type of scam is so prevalent in the cryptocurrency world, that in response to the high number of fake accounts claiming to be him and tricking people into sending ETH to a scam address, Vitalik Buterin, the founder of Ethereum, changed his Twitter name to "Vitalik 'Not giving away ETH' Buterin".
Cryptocurrency is not federally regulated or FDIC insured like a bank account, which means if an account gets hacked, the government will not work to restore a customer's funds.
What changes can be made to combat this hacks?
Does this prove that regulation is important?
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