Record $3.8 Billion Stolen in Crypto Hacks Last Year, Report Says

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New York CNN—

A record $3.8 billion worth of cryptocurrency was stolen from various services last year, with much of the theft by hackers linked to North Korea, according to a report released by the company on Wednesday. blockchain analysis tool Chainalysis.

The increase in crypto heists, of $3.3 billion in 2021, came as the overall cryptocurrency market suffered significant declines. The value of Bitcoin, for example, fell over 60% last year.

North Korea was a major driver of the surge in thefts, according to the report. Hackers linked to the country stole about $1.7 billion worth of cryptocurrency through various hacks in 2022, up from $429 million the previous year, Chainalysis said.

Some of the biggest crypto hacks of the year have since been attributed to North Korea. The FBI blamed hackers linked to the North Korean government for more than $600 million in hacking Axie Infinitys Ronin video game network in March and $100 million in Harmony, a cryptocurrency company, in June.

North Korea’s total exports in 2020 totaled $142 million worth of goods, so it’s no exaggeration to say that cryptocurrency hacking is a significant part of the national economy, Chainalysis notes in the report. .

U.S. officials fear Pyongyang could use money stolen from crypto-hacks to fund its illicit nuclear and ballistic weapons program. North Korean hackers have stolen the equivalent of billions of dollars in recent years attacking cryptocurrency exchanges, according to the United Nations.

In addition to hacking into cryptocurrency firms, suspected North Koreans have impersonated other nationalities to apply for jobs at those firms and send money back to Pyongyang, US agencies have publicly warned.

In general, decentralized finance (DeFi) protocols were the top target for hackers, accounting for more than 80% of all stolen cryptocurrencies for the year, according to the report. These protocols are being used to replace traditional financial institutions with software that allows users to transact directly with each other via blockchain, the digital ledger that underpins cryptocurrencies.

Of the attacks against DeFi systems, 64% targeted cross-chain bridge protocols, which allow users to exchange assets between different blockchains. Deck services usually hold large supplies of various parts, making them targets for pirates. (The flights on Axie Infinity and Harmony were both deck hacks.)

As crypto hacks have continued to rise over the past year, there is cause for hope. Law enforcement and national security agencies are expanding their abilities to fight digital criminals, such as the FBI’s recovery of $30 million in cryptocurrency stolen in the Axie Infinity hack.

These efforts, combined with other agencies cracking down on money laundering techniques, mean that these hacks will become more difficult and less successful with each passing year, according to Chainalysis.

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