FBI Warns of Increased Cybercriminal Activity Surrounding Crypto

The FBI issued a Public Service Announcement (PSA) regarding increasingly concentrated cybercriminal activity surrounding the DeFi (Decentralized Finance) landscape. The FBI cautions investors to do their due diligence in choosing what DeFi protocols they decide to engage with, citing particular vulnerabilities from their (frequent) open-source nature. While transparent, open-source opens up the book on eventual security vulnerabilities that cybercriminals can explore. Due to the amount of money being moved through Decentralized Exchanges (DEX), which in 2021 moved around $1 trillion, there's a huge appetite for exploits.

The FBI's numbers are staggering. According to the service, an estimated $1.3 billion have already been hacked away from the cryptocurrency market, with 97% of that value taken from the DeFi sector between January and March this year. The FBI estimates this to correspond to an increase of 72% over the same period last year, and a 30% increase over 2020. According to public data, over $4 billion were siphoned from the crypto space throughout the entirety of 2021. The service also explicitly points to wormholes — services that bridge disparate blockchains together — as preferred points of attack. Recently, one such service, Ronin, was hacked for $625 million.

Takeaway

The FBI clearly considers the cryptocurrency space a source of concern, with hacks from bad actors impacting a large number of users (i.e. investors) with each successful extrication of funds. It falls to users to perform their due diligence in choosing which exchanges to interact with and where they'll deposit their investments. Looking for exchanges that have adequate transparency, that are actually decentralized, that have performed independent code audits, and that have a history of strong coding and event response are paramount for investors to accurately gauge how risky their investment is. Easier said than done.

At the same time, the responsibility doesn't lay solely with investors. The FBI urges exchanges to perform the same steps that they're asking users to be aware of. They should perform independent code audits, manage real-time on-chain analytics, and create timely response plans that can effectively communicate with investors.

Ultimately, users also choose with their wallets which DeFi platforms rise to prominence. The more informed their decisions are, the smarter their investment allocation, and the lower the risk.

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Francisco Pires
Freelance News Writer

Francisco Pires is a freelance news writer for Tom's Hardware with a soft side for quantum computing.