Amid a string of scandals, bankruptcies and fraud charges blighting the crypto world last year, 2022 was also the biggest ever year for crypto hacking, new research reveals today.
As much as $3.8 billion was stolen over the course of the year, with huge spikes in March and October across several dozen major hacking incidents according to research by Chainalysis.
Kimberly Grauer, director of research at Chainalysis, said: “This year we saw some really big attacks that accounted for a lot of the value hacked.
“We saw a lot of advancements in the Web3 space - that introduced large new vulnerabilities that expert hacking organisations exploited.
North Korea-linked groups were by far the most prolific cryptocurrency hackers in 2022, shattering their own records for theft, stealing an estimated $1.7 billion worth of cryptocurrency across several hacks.
Chainalysis said the transparency of crypto transactions is what makes decentralised finance vulnerable — hackers can scan DeFi code for vulnerabilities and strike at the perfect time to maximize their theft.
Grauer urged decentralised finance businesses to ramp up their cybersecurity plans as a first priority.
“It’s about prioritising safe growth rather than growth at all costs, and making the tough decisions early on to create quality protocols rather than being the first to launch a new contract without hiring a security team,” she said.
It comes as the government unveiled plans to regulate the crypto market as part of a bid to protect consumers in the wake of the FTX scandal.
Fresh rules are set to be introduced for crypto trading platforms in addition to a new, stricter regime for crypto lending as part of a consultation launched today. Crypto activity, rather than crypto assets themselves, will be subject to the new rules, according to the consultation.
The government paper said the implosion of FTX has highlighted the urgent need for tougher crypto regulation.
“FTX’s failure has underscored important questions around conflicts of interest, market conduct and operational resilience. It has also demonstrated that integrated business models – currently prevalent across the ecosystem – can result in complex and sometimes reinforcing risk profiles,” it said.
“Mitigating these risks will require a combination of robust prudential safeguards, operational risk controls, transparency and data reporting arrangements, measures to manage conflicts of interest, good governance and adequate record keeping.”
