Cryptocurrency Hacking Continues To Rise

• Published date: 15 February 2023
• Subject Matter: Criminal Law, Technology, White Collar Crime, Anti-Corruption & Fraud, Crime, Fin Tech
• Law Firm: Rahman Ravelli Solicitors
• Author: Mr Syedur Rahman

Syed Rahman, crypto specialist at financial crime lawyers Rahman Ravelli, considers the latest statistics.

Last year was the biggest year for crypto hacking, with $3.8 billion stolen from cryptocurrency businesses.

A report by blockchain analysts Chainalysis shows that 2022 continued the previous year's trend of decentralised finance (DeFi) being the target most attractive to hackers.

Attacks on DeFi protocols (the set of codes that govern how digital assets are used on a blockchain network) accounted for 82.1% of all cryptocurrency stolen by hackers – a total of $3.1 billion. This was up from the 2021 DeFi figure of 73.3%.

Of the $3.1 billion, 64% came from cross-chain bridge protocols. These enable users to move their cryptocurrency from one blockchain to another. This is usually achieved by locking the user's assets into a smart contract on the original chain and then minting equivalent assets on the second chain.

Such a practice, however, can be attractive to hackers. Any mistakes in the underlying smart contract code could be recognised and exploited by those looking to make illegal gains.

The transparency of DeFi has made it one of the fastest-growing...