Cryptocurrency

FBI warns against DeFi after data reveals sector accounts for 97% of stolen $1.3B during Q1

The U.S. Federal Bureau of Investigation (FBI) recently warning He spoke out against DeFi protocols after discovering that 97% of $1.3 billion was stolen via DeFi protocols in the first three months of this year.

The FBI says it is observing that cybercriminals are increasingly taking advantage of the complexities of cross-chain transactions. The warning article, citing data from crypto analytics firm Chainalysis, notes that DeFi’s share of total stolen funds is growing 72% each year.

Chart showing DeFi thefts by period from 2019 to Q1 2022 (Source: TradingPedia)

Abused function

This warning indicated that a small number of DeFi features were the most vulnerable. According to the agency, smart contracts are the first and most vulnerable. The warning article says that investors and developers have lost around $3 million worth of cryptocurrency in his first three months of 2022 due to an attack on smart contracts.

The signature verification mechanism is of secondary importance. If operated properly, all funds within the protocol could be withdrawn, and between January and March he had about $320 million stolen.

The FBI also warned about the potential use of price pair manipulation, price oracles, circumvention of slippage checks during leveraged trading, and misbehaving price calculations. Millions of dollars worth of cryptocurrencies are said to have been sacrificed.

Recommendation

The warning concludes with a list of recommendations for investors and DeFi protocols. The agency suggested investors learn about DeFi protocols and their capabilities, research protocols before depositing funds, and look for potential risks and audit reports.

For DeFi protocols, the FBI advised real-time analysis, monitoring, and regular testing. He added that it could be beneficial to develop and practice responses to possible emergencies.

DeFi hacking

crypto slate We had an exclusive interview with Brian McColl, technical analysis expert at TradingPedia, in May 2022, about the rise in attacks against DeFi protocols.

McColl said the increase in the number of attacks is a growing interest in DeFi. But it has also led to his FUD in the field, which has led to a gradual decline in the number of new users joining the DeFi space.

Analysts at TrustPedia said this negative sentiment towards DeFi projects is slowly increasing supporters of Central Bank Digital Currencies (CBDC). In contrast to his DeFi protocol, which is unregulated, CBDC is hosted by a government agency, making it appear secure and impenetrable.

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