(Kitco News) - The U.S. Federal Bureau of Investigation (FBI) has issued a new alert highlighting the dangers of decentralized finance (DeFi), which the agency says has become a favorite target of cybercriminals.
“Cyber criminals seek to take advantage of investors’ increased interest in cryptocurrencies, as well as the complexity of cross-chain functionality and open source nature of DeFi platforms,” the agency said.
According to the Public Service Announcement (PSA) released by the FBI on Tuesday, DeFi platforms were the primary source of stolen funds in the first quarter and continue to experience regular exploits.
“Between January and March 2022, cyber criminals stole $1.3 billion in cryptocurrencies, almost 97 percent of which was stolen from DeFi platforms, according to the U.S. blockchain analysis firm Chainalysis,” the post from the FBI said.
The agency noted that the percentage of funds stolen from DeFi platforms was 72% in 2021 and only 30% in 2020, which highlights the increased focus on the DeFi sector by hackers and scammers.
The PSA revealed several of the methods which the FBI observed cyber criminals employ to fleece funds, with the largest single exploit resulting in a loss of $320 million.
According to the agency, it involved “Exploiting a signature verification vulnerability in the DeFi platform’s token bridge,” which allowed the attackers to “withdraw all of the platform’s investments, resulting in approximately $320 million in losses.”
Another attack involved “Manipulating cryptocurrency price pairs by exploiting a series of vulnerabilities, including the DeFi platform’s use of a single price oracle, and then conducting leveraged trades that bypassed slippage checks and benefited from price calculation errors to steal approximately $35 million in cryptocurrencies.”
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The FBI’s Internet Crime Complaint Center has advised investors that they need to “Research DeFi platforms, protocols, and smart contracts before investing and be aware of the specific risks involved in DeFi investments.”
As for DeFi platforms, the agency recommended that they “Institute real time analytics, monitoring, and rigorous testing of code in order to more quickly identify vulnerabilities and respond to indicators of suspicious activity.”
Overall, the agency highlighted the fact that “Investment involves risk” and stated that “Investors should make their own investment decisions based on their financial objectives and financial resources and, if in any doubt, should seek advice from a licensed financial adviser.”
