Crypto analytics unit CipherTrace found a sharp rise in DeFi-related losses, with criminals accumulating $240 million from DeFi projects in the first five months of 2021.
DeFi rug pulls (also known as exit scams) account for nearly half of all fraud and thefts so far this year. An increase in investor interest attracted criminal attention, noted CipherTrace.
- Major crypto hacks, thefts, and frauds hit $432 million by April’s end.
- $83.4 million was lost to DeFi-related fraud.
- DeFi hackers stole $156 million from platforms like Yearn.
Decentralized Finance (DeFi) are financial systems outside of traditional banks and brokerages.
DeFi projects rely on blockchain-powered smart contracts for peer-to-peer crypto trading, lending, and yield farming.
And DeFi is growing. $82 billion worth of crypto is now locked in DeFi platforms — up from $16 billion at the start of the year, according to DeFi Pulse.
“Bad actors will seek to take advantage of the hype to draw people into scams,” said CipherTrace chief exec Dave Jevans to Reuters.
“Hackers will seek out projects that have launched without performing adequate security audits, exploiting loopholes encoded in the smart contracts.”
But despite the rise in DeFi incidents, CipherTrace noted a 60% drop in crypto crime last year — from $4.5 billion in 2019 to $1.9 billion in 2020.
What about Turkey’s $2 billion crypto exit scam?
In April, the founder of Thodex exchange allegedly fled Turkey with $2 billion in user funds.
Ozer took the crypto exchange offline citing technical difficulties.
CipherTrace said they’re continuing to investigate the alleged Thodex exit scam.
Thodex ran a promotional campaign giving away free Dogecoin to new users in the days before exchange went dark.