Attacks Against DeFi Protocols Surge

Some stats your way

• Last year, more than $3 billion worth of digital assets were stolen.
• In Q1 2022 itself, more than $1.3 billion has already been stolen, indicating that the path taken by cybercriminals is even more aggressive as compared to last year.
• Of all cryptocurrency exfiltrated this year, 97% belongs to DeFi firms and only 3% to exchanges. 
• In 2021, around 25% of crypto stolen from DeFi was returned to victims, however, no such feat has been achieved this year yet.
• Money laundering on DeFi protocols has surged by 1,964%. 

Why this matters

• While in the past, DeFi platforms lost money due to security breaches, now the largest exploits are usually the result of code exploits and flash loan attacks. 
• These platforms are entirely decentralized and don’t have intermediaries, brokers, or exchanges. They need to depend on transparent, open-source development models to prove their trustworthiness. 
• Regardless, this enables attackers to analyze the smart contracts and services and abuse a flaw before it is patched. 
• Another problem is that the market can be manipulated during a loan action, raising the value of the borrowed token and buying it again at a reduced price. This is known as a flash loan attack that takes mere seconds to develop and involves several DeFi platforms. 

Latest DeFi hacks

• The FBI, the CISA, and the Treasury Department issued a joint advisory warning against a campaign by the North Korean-based Lazarus APT. Last week, the prolific threat actor was attributed to a hack of $540 million from a DeFi. The advisory, furthermore, states that the threat actors are targeting multiple entities operating in the cryptocurrency and blockchain technology industries. 
• BeanStalk, an Ethereum-based stablecoin protocol, suffered a flash loan attack and reported losing $182 million, in which the attacker stole $80 million in crypto assets. 
• Earlier this month, Lazarus APT was found spreading trojanized DeFi wallet apps to deploy a backdoor into windows systems. 
• An attack on Inverse Finance resulted in the loss of more than $15 million worth of cryptocurrency. However, this was not a flash loan attack.
• Another DeFi platform Ola Finance suffered a re-entrancy attack and reported the theft of $4.67 million in cryptocurrency. 

The bottom line