Crypto hackers set for record year after looting over $3 billion

Representative Image

Cryptocurrencies may have crashed this year but they remain a digital cash-machine for one potent constituency: hackers.

At least $718 million has been stolen so far in October alone, taking the gross tally for the year past $3 billion and putting 2022 on course to be a record for the total value hacked, according to blockchain specialist Chainalysis Inc.

Most of the targets are so-called decentralized finance -- or DeFi -- protocols, which deploy software-based algorithms to enable crypto investors to trade, borrow and lend on digital ledgers without using a central intermediary.

2/ At this rate, 2022 will likely surpass 2021 as the biggest year for hacking on record. So far, hackers have grossed over $3 billion dollars across 125 hacks. pic.twitter.com/vgT3pz2iOu

— Chainalysis (@chainalysis) October 12, 2022

Hackers have become adept at exploiting weaknesses in the security, coding and structure of DeFi marketplaces. That’s putting the onus on crypto players to find solutions given that DeFi is touted as important for crypto adoption.

“October is now the biggest month” for hacking activity in 2022, Chainalysis said Thursday on Twitter, adding that bridges between blockchains are a big vulnerability too.

Two major exploits have roiled the crypto sector in recent days. One was a heist whereby a hacker spirited away about $100 million from DeFi service Mango by manipulating the price of its token. The perpetrator wiped out depositors on the platform in the process.

Last week, 2 million Binance Coins -- equivalent to nearly $570 million -- were effectively minted and taken by a hacker. About $100 million wasn’t recovered, while the rest was frozen, according to a Binance statement.

DeFi platforms have become a frequent target of state-sponsored hacking. Earlier this year, Chainalysis estimated that North Korea-affiliated groups have stolen approximately $1 billion of crypto from DeFi protocols.