FBI Warns Investors When $1.9 Billion Cryptocurrency Has Been Hacked Year To Date

The US Federal Bureau of Investigation (FBI) issued new recommendations for DeFi investors on August 29, citing an uptick in criminals exploiting smart contracts. By July, the blockchain analysis company found that hacks were responsible for the overall theft of $1.9 billion worth of cryptocurrency in 2022 so far.

In light of an increase in criminals taking advantage of smart contract vulnerabilities, the US Federal Bureau of Investigation (FBI) is urging investors in decentralized finance (DeFi) protocols to look for platforms that have completed code audits.

“Cyber criminals are increasingly exploiting vulnerabilities in the smart contracts governing DeFi platforms to steal cryptocurrency, causing investors to lose money,”

The FBI wrote in an August 29 public service announcement detailing recommendations for investors and DeFi platforms alike. 

This year, DeFi has been heavily involved in cryptocurrency theft. DeFi protocols were involved in an astounding 97% of the cryptocurrency stolen up until May 1, according to Chainalysis. The blockchain analysis business discovered in July that hacks were to blame for the overall theft of $1.9 billion in cryptocurrencies in 2022.

Investors in DeFi protocols have received four important suggestions from the FBI. First, it urged users to educate themselves about the general risks of DeFi and to conduct their own study. The adoption of platforms that have undergone one or more third-party code audits was then advised.

The FBI also recommended people to “be alert to DeFi investment pools with extremely limited timeframes to join and rapid deployment of smart contracts, especially without the recommended code audit“. It also highlighted the possible risks of  “crowdsourced solutions to vulnerability identification and patching” and open-source code repositories. 

The use of “real-time analytics,” monitoring, and code testing by DeFi protocols is also advised by law enforcement in order to identify vulnerabilities and develop a plan for alerting platform users in the event of a security crisis.

Additionally, the FBI described a few instances in which it discovered criminals abusing DeFi platforms to steal cryptocurrency. These include a $320 million signature verification exploit, a $35 million theft connected to manipulated price pairs, and a $3 million loss for DeFi developers as a result of a flash loan that triggered a smart contract hack.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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