North Korean hackers steal $1 billion in crypto from DeFi protocols this year: report

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August 18, 2022

SEOUL – North Korea-affiliated hacking groups stole about $1 billion worth of cryptocurrency from decentralized finance protocols alone in the first seven months of this year, a US analytics firm said Tuesday. the blockchain.

Cryptocurrency theft by North Korean hackers accounted for more than 50% of total losses from cryptocurrency hacks, according to an online report by blockchain data platform Chainalysis.

Cryptocurrency stolen in hacks of various services stood at $1.9 billion through July this year, an increase of almost 60% from the same point in 2021. A total of 1, $2 billion in cryptocurrency was stolen in the same period last year.

“This trend doesn’t look set to reverse anytime soon, with a $190 million hack of the Nomad cross-chain bridge and a $5 million hack of multiple Solana wallets already occurring in the first week of August” , said Chainalysis, which is headquartered in New York.

The focus of North Korean state-sponsored hacking groups on targeting decentralized finance, or DeFi, has been singled out as the main reason for the increase in cryptocurrency theft this year.

DeFi protocols have also become an easy target for North Korean state-sponsored hacking groups, including the US-sanctioned Lazarus group, Chainalysis reported, explaining that a startling increase in funds stolen from DeFi protocols started in 2021.

“Furthermore, much of the value stolen from DeFi protocols can be attributed to bad actors affiliated with North Korea, especially elite hacking units like Lazarus Group,” the report said. “We estimate that so far in 2022, North Korea-affiliated groups have stolen approximately $1 billion worth of cryptocurrency from DeFi protocols.”

DeFi is an emerging financial technology that allows users to trade cryptocurrencies privately without a centralized intermediary or involving order books on public blockchains.

The protocols, widely known as standardized codes, are used to create decentralized applications and smart contracts to enable online financial transactions between peers. But Chainalysis pointed out that DeFi protocols are “particularly vulnerable to hacking” because they use open-source code that can be studied and exploited by cybercriminals.

For example, hackers can steal cryptocurrency from DeFi protocols through a flash lending attack. Flash loan attackers can manipulate cryptocurrency prices by exploiting faulty codes.

London-based blockchain analytics firm Elliptic said in June that North Korea’s state-sponsored Lazarus Group has focused on attacking decentralized financial platforms such as blockchain bridges.

Elliptic also revealed that the Lazarus Group is behind the theft of $100 million worth of cryptocurrency from Harmony’s blockchain bridge service, called Horizon Bridge.

The US government has accused the Lazarus Group of stealing $625 million from Axie Infinity’s proprietary Ronin blockchain bridge in March, the largest known virtual currency heist to date.

“Furthermore, we should not expect theft to decline based on cryptocurrency market movements the way the scam does – as long as the crypto assets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them,” Chainalysis said.

“The only way to stop them is for the industry to step up safety and educate consumers on how to find safe projects to invest in.”

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