The total losses from cryptocurrency hacks during the first seven months of the year reached almost $2 billion, according to a report by Chainalysis. The report noted that most of these losses came from a surge in the theft of funds from decentralized finance (DeFi) protocols.
During the same period last year, the amount of money stolen by hackers was around $1.2 billion. DeFi applications, mainly run on the Ethereum blockchain, allow people to fund their digital assets through peer-to-peer lending.
The report came after the recent hacking of Solana wallets and the $190 million loss from the cross-chain bridge Nomad. Chainalysis argued that such attacks would continue to increase.
Following the heist, Nomad announced on Twitter that it was working with law enforcers to identify and recover the funds stolen from its accounts. The company said they had retained multiple forensics and intelligence firms to help track the fraudsters' activities.
In a blog post, the firm noted that the vulnerability in the open-source code of DeFi protocols was one of the main reasons they were prone to cybercriminal attacks. It also said that increasing incentives for developing new applications could lead to security gaps.
A significant portion of the funds stolen from DeFi applications could be traced to individuals with connections to North Korea. These individuals are usually associated with the Lazarus Group.
Through the first seven months of this year, North Korea-associated groups have stolen about $1 billion worth of cryptocurrency from DeFi protocols.
Crypto scams down by 65 percent
In other news, the revenue generated by crypto scams during the first seven months of this year was $1.6 billion, 65 percent lower than in the same period last year. The decline in scam instances came amid the fall of prices in digital assets.
Chainalysis director of research Kim Grauer attributed the decline in scam revenue to the various law enforcement actions against fraudsters. These actions, combined with the availability of adequate tools and solutions from exchanges, have helped prevent scams.
"Scams are down primarily because of the crypto downturn, but also because of the many law enforcement wins taken against scammers and the product solutions that exchanges can use to fight scamming," said Grauer.
According to data from CoinGecko, the cryptocurrency industry's total market capitalization was around $1.1 trillion as of late Thursday. Bitcoin has also lost about 48 percent of its value this year. The cryptocurrency has been hovering between $20,000 and 24,000 in the last few months.
In January 2022, the total amount of money stolen from scams fell along with the price of Bitcoin. The number of individual transfers to these types of scams also decreased to the lowest in the last four years. Chainalysis reported that the number of people falling for cryptocurrency scams has never been lower.
"Those numbers suggest that fewer people than ever are falling for cryptocurrency scams," Chainalysis said. "One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims."