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Stolen funds from cryptocurrency platforms saw a rise in 2020: Report

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Over $520 million worth of cryptocurrency was stolen in 2020

Over $520 million worth of cryptocurrency was stolen from services and individuals via hacks and non-technical attacks such as social engineering or phishing efforts, in 2020, as per a Chainalysis crypto crime report. The report stated an increase in the amount of cryptocurrency stolen compared to 2019. 

Data from the report stated more than half of the amount stolen in 2020 was due to the hack of the cryptocurrency exchange KuCoin, by the North-Korean cybercriminal syndicate Lazarus Group. The group was accused of stealing $275 million worth of cryptocurrency from KuCoin, which made it the biggest cryptocurrency theft for 2020. The exchange claimed to have recovered $204 million worth of stolen funds. Lazarus Group was also responsible for other cryptocurrency exchange attacks such as the 2019 UpBit Hack, from which $49 million worth of cryptocurrency was stolen. Overall, the group is believed to have stolen more than $1.75 billion worth of cryptocurrency, the report claimed.

Other cryptocurrency thefts for 2020 were $40 million from Josh Jones, $34 million from Harvest Finance, $25 million from Lendf.me, $20 million from Pickle Finance, $15 million from Eminence, $9 million from an undisclosed exchange, $8.3 million from MakerDAO, $8 million from bZx and $8 million from Warp Finance, and many more.

The report insights showed that the usage for decentralised finance (DeFi) platforms went up in 2020, and with it the amount stolen from DeFi platform has also seen a rise. Despite representing six percent of all cryptocurrency activities, thefts from DeFi platforms represented around 33% of cryptocurrencies stolen in 2020. Cybercriminals were accused of stealing more than $170 million from DeFi platforms for the same year. 

As per the report, stolen funds primarily move to exchanges, however, DeFi platforms’ share of all stolen funds received more than doubled during 2020.The decentralised nature of DeFi platforms is a factor in the platform’s usage as a money laundering mechanism, as many don’t collect know your customer (KYC) information on transactions or report on transaction activity as has been stated by the bank secrecy act (BSA) and other financial regulations.

(With insights from the Chainalysis Crypto Crime Report, 2021)

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