Illicit cryptocurrency transactions in the decentralised finance (DeFi) sector have been rising over the last two years, according to the Web3 Safety & Compliance report from Chainalysis.
Over the last three years, illicit DeFi activities have witnessed a steady rise in terms of raw value and also as a share of all cryptocurrency transaction value, primarily in the theft of funds through hacking and abuse of DeFi protocol for money laundering.
In 2022, the total value received by DeFi from illicit and share of all value almost touched US$2.5 billion, data from Chainalysis showed.
DeFi is an umbrella term for peer-to-peer financial services on public blockchains.
According to Chainalysis, Ronin Bridge and Wormhole Network driven hacks have accelerated the value stolen from DeFi protocols since the beginning of 2021. It reached its highest-ever levels in Q1 2022, with cryptocurrency value stolen, amounting between $1 billion to $ 1.5 billion.
In fact, throughout 2021, DeFi protocols became the go-to target for hackers looking to steal cryptocurrency, the report stated.
Even though an ever-growing share of all funds stolen from cryptocurrency platforms since the beginning of 2020 was through DeFi protocols, the bulk of stolen funds was lost in 2021, according to the report.
As of May 1, the report added that DeFi protocols account for 97% of the $1.68 billion worth of cryptocurrency stolen in 2022.
This year, most of the cryptocurrency stolen from DeFi protocols has gone to hacking groups in ties with the North Korean government, Chainalysis said.
A report from Chainalysis further stated that 2022 has been the biggest year for North Korean hackers as they have successfully stolen over US$840 million. Those thefts were based entirely on hacks of DeFi protocols.
DeFi protocols have witnessed serious money laundering issues. These protocols represent a vast share of all funds sent from illicit addresses to services over the last two years.
In 2022, DeFi protocols have become the biggest recipient of illicit funds, taking in 69% of all funds sent from addresses associated with criminal activity, compared to 19% in 2021, the report showed.
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