INVESTING

Crypto hackers stole $1.9 billion in 2022 already, but fewer people are falling for scams

Sara Edwards
USA TODAY

Crypto hackers have already stolen $1.9 billion worth of cryptocurrency during the first seven months of 2022, a 37% increase from the same period last year.

According to a report from Chainalysis, a blockchain data platform, illegal crypto activity has risen via hacking and stolen funds. 

The report found $1.9 billion worth of crypto had been stolen in hacks of different cryptocurrency services through July 2022, whereas July 2021 saw just under $1.2 billion stolen.

The trend is not expected to reverse any time soon. The first week of August saw several hacks, including a $190 million hack of Nomad, a cross-chain bridge, and a hack of $5 million from several Solana wallets. 

Does DeFi make hacking easier?

Chainalysis attributes the rise in funds stolen from DeFi protocols, which are "uniquely vulnerable" to hacking. So far this year, much of the value stolen has been linked to hackers from North Korea-affiliated groups, which have stolen around $1 billion of crypto from DeFi.

According to the report, this kind of theft is likely to continue as long as DeFi protocol pools and other services are vulnerable.

"The only way to stop them is for the industry to shore up security and educate consumers on how to find safe projects to invest in," the report finds. "Law enforcement, meanwhile, must continue developing their ability to seize stolen cryptocurrency to the point that hacks are no longer worthwhile."

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Not as many people fell for crypto scams

Fewer people are falling for cryptocurrency scams, and individual transfers to crypto scams in 2022 is the lowest it's been in the past four years, a report this week suggests. 

According to the report from Chainalysis, illicit activity appears to be linked to the fall of prices across currencies and the economy. 

Cryptocurrency scams typically present themselves as a passive investment opportunity that promises huge returns. But with the value of all types of assets falling, not just crypto, this type of scam is less appealing to potential victims, the report found. 

Kim Grauer is the director of research at Chainalysis. She said Chainalysis research suggests that some types of criminal crypto activity are more correlated with the overall market than others. 

"Specifically, scamming has declined year over year with the overall market slump," she said in a statement. "However, funds stolen in hacks are at all-time highs, suggesting these thieves-including nation state actors- are ramping up their activity regardless of prices." 

Who is most vulnerable to crypto scams?

Chainanalysis estimated that inexperienced crypto users who are typically more likely to fall for scams are now less likely to be tempted as crypto prices and markets have imploded. That is much less attractive than get rich quick schemes that flourished when prices were high and promised quick returns. 

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Large outliers like PlusToken, which scammed users out of $2 billion in 2019 and Finiko, which secured over $1.5 billion in 2021, are usually the main drivers of scam revenue. But according to the report, no scams have approached this level in 2022, with the highest value stolen sitting at $273,935,606 from a scam called JuicyFields.io.

But one or two huge scams drive total scam revenue year by year, so if a large scam like Finiko or PlusToken is exposed, the trend of declining scam revenue will be reversed 

While illegal crypto activity has fallen alongside legitimate activity, "the public and private sectors must continue to work together and hone their ability to fight cryptocurrency-based crime," according to the report.

"The good news is that with the right tools, all of this activity can be investigated thanks to the transparency of the blockchain," Grauer said.

Sara Edwards is a consumer news intern at USA TODAY. You can follow her on Twitter @sedwards380.