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Cryptocurrency theft rises significantly

The average dollar amount of stolen cryptocurrencies has jumped significantly in 2022 despite the fall in value of these assets this year.

Analysis conducted by US publisher BestBrokers has revealed the average value of stolen cryptocurrencies in 2022 has experienced a significant increase despite the incidence of theft reducing over the same period.

The examination found the average amount stolen via the hacking of a cryptocurrency account year-to-date for 2022 is US$26.6 million. In 2021, the recorded average amount stolen was US$12.9 million, meaning cryptocurrency theft has risen by 206 per cent this year.

Further, it was found cryptocurrency hacks in 2021 totalled 251, while only 64 have taken place in 2022 so far. However, US$3.2 billion worth of cryptocurrencies were stolen last year, while cryptocurrencies to the value of US$1.7 billion have already been stolen this year as at mid-June.

This figure has materialised despite dropping cryptocurrency values throughout 2022.

“All this implies that black hats are aiming for and successfully hitting larger targets in 2022. The blooming DeFi (decentralised finance) market seems to be collecting the most hacker interest and black hats are currently making the largest returns on their invested time there,” BestBrokers said.

“In 2021, 72 per cent of all stolen crypto was attributed to DeFi protocols and services. In Q1 2022, this percentage increased to 97 per cent, raising many eyebrows and ringing many alarm bells.”

DeFi refers to peer-to-peer financial services powered by blockchain. They have been created to serve as a crypto alternative to banks with different services and protocols supporting conventional banking services, such as borrowing and lending activities.

“DeFi has been around since 2015, made possible by Ethereum’s smart contracts. However, it saw significant adoption only in 2020, when volumes of crypto held in DeFi smart contracts exceeded US$1 billion in value. Over the next year it exploded, reaching US$100 billion in 2021,” BestBrokers crypto expert Robert Hoffman said.

“This explosive growth has to do with big venture capital pouring the largest part of their money in fintech start-ups ever since the start of the recent pandemic.

“The race for building the digital financial system of the fourth industrial revolution is an extremely rapid one with many stakeholders competing for the first spot. Often when the time to market is too short it results in compromised aspects of the product, including security.”

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