Bitcoin Cybercrime
Cryptocurrency Insights World-Region-Country

DeFi Protocols had $2.2billion Stolen From Them in 2021 Finds TradingPlatforms.com

Reports from Tradingplatforms.com have found that despite the positive growth in cryptocurrencies, the increase in transactions also correlates with the increase in DeFi-related crypto crimes.

Decentralised finance has been one of the most significant growth factors of cryptocurrency usage. In 2021, DeFi transaction volume grew by 912 per cent, indicating the increased interest in the space.

However, the increase in transactions also correlates with the increase in DeFi-related crypto crimes, according to reports by Tradingplatforms.com. During the same year, the amount of cryptocurrency stolen through DeFi platforms totaled about $2.2billion, which was a 1300 per cent increase from 2022’s amount.

“Decentralised tokens cause quite the spur in the crypto space, which is why many people are now coming on board. However, because just about anyone can create a DeFi token and have it listed without a code, we are now seeing an increase in crypto crimes, with DeFi rug pools becoming quite common,” Edith Reads from Tradingplatforms.com commented.

Money laundering through DeFi protocols also on the rise

The reports by Tradingplatforms.com also indicate that more crypto criminals are now turning to DeFi protocols to launder illicit funds. DeFi recorded a 1964 per cent increase in usage for money laundering, the highest year-on-year growth.

Mining accounts for the second-highest year-over-year growth in illicit funds, coming a little shy of a 500 per cent increase. P2P exchange services and gambling platforms were the only services to record a decrease in illicit fund usage in 2021.

What’s more, of the $3.2billion worth of cryptocurrency stolen in 2021, assets stolen from DeFi protocols were about 72 per cent of the total, which is roughly $2.2billion.

DeFi protocols are an easy target for hackers

Fraudulent developers are now using DeFi protocols to come up with well-designed rug pools. The most common method is tricking investors into purchasing DeFi tokens. The developers then drain the project’s funds, causing the token’s value to crash and huge losses for the investors.

The speculation on DeFi tokens and their role in the new age of the internet makes many crypto enthusiasts bullish on these projects. Unfortunately, with just about the right technical knowledge, anyone can create a DeFi token and list it in a decentralised exchange without a code audit to publicly confirm the smart contract has no loopholes to advantage the developers.

It’s also worth noting that hackers can easily manipulate bugs in the protocols’ smart contract codes and exploit them to steal the investors’ funds.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

Related posts

In Profile: Prakash Pattni of IBM

Polly Jean Harrison

Diversity In Crypto

Wirex

Episode 17: Cryptocurrency, Bitcoin & Paypals Venture into Bitcoin

Dominic Brough