A record $3.8 billion was stolen in crypto hacks last year, a report says


By Jennifer Korn

A record $3.8 billion worth of cryptocurrency was stolen from various services last year, with most of those thefts fueled by hackers linked to North Korea, according to a report released Wednesday by blockchain analytics firm Chainalysis.

The increase in cryptocurrency heists, from $3.3 billion in 2021, came as the overall cryptocurrency market suffered a significant decline. The value of Bitcoin, for example, fell by more than 60% last year.

North Korea was a key driver of the increase in thefts, the report said. Hackers linked to the country stole an estimated $1.7 billion worth of cryptocurrency through various hacks in 2022, up from $429 million the previous year, Chainalysis said.

Some of the biggest crypto hacks of the year have been attributed to North Korea. The FBI blamed hackers linked to the North Korean government for the more than $600 million hack of the Ronin network of the Axie Infinity video game in March and the $100 million hack of Harmony, a cryptocurrency company, in June.

“North Korea’s total exports in 2020 were $142 million worth of goods, so it’s no exaggeration to say that cryptocurrency hacking is a significant part of the nation’s economy,” Chainalysis said in a report.

US officials worry that Pyongyang will use money stolen from cryptocurrency hacks to fund its illicit nuclear and ballistic weapons programs. North Korean hackers have stolen the equivalent of billions of dollars in the past few years by raiding cryptocurrency exchanges, according to the United Nations.

In addition to hacking cryptocurrency companies, suspected North Koreans posed as citizens of other nations to apply for jobs at such companies and send money back to Pyongyang, US agencies have publicly warned.

In general, decentralized finance (DeFi) protocols were the main target of hackers, accounting for more than 80% of all cryptocurrencies stolen during the year, according to the report. These protocols are used to replace traditional financial institutions with software that allows users to transact directly with each other via blockchain, the digital ledger that underpins cryptocurrencies.

Of the attacks on DeFi systems, 64% targeted cross-chain bridging protocols, which allow users to exchange funds between different blockchains. Bridge services typically hold large reserves of various coins, making them targets for hackers. (The Axie Infinity and Harmony thefts were bridge hacks.)

While crypto hacking continued to grow last year, there is reason to be hopeful. Law enforcement and national security agencies are expanding their capabilities to fight digital criminals, such as the FBI’s recovery of $30 million worth of cryptocurrency stolen in the Axie Infinity hack.

Those efforts, combined with other agencies cracking down on money laundering techniques, “mean these hacks will become more difficult and less fruitful every year,” according to Chainalysis.

™ & © 2023 Cable News Network, Inc., a Warner Bros. company. Discovery. All rights reserved.

Additional reporting by CNN’s Sean Lyngaas.

Leave a Comment

Your email address will not be published. Required fields are marked *