Cryptocurrencies took the world by storm when Bitcoin was first introduced, acting as the world’s first decentralized online currency. The crypto market had limited barriers to entry compared to traditional finance and offered fast, secure, and private payments to users. The fact that it was built on decentralized blockchain technology that eliminated the need for a centralized banking institution attracted millions of users across the world, especially from developing countries.
However, blockchain has been plagued by dishonest and malicious players since its inception. The enhanced privacy, security, and limited traceability capabilities that were the technology’s selling point also attracted criminal elements that could easily avoid detection on the crypto market. The result has been a multitude of crypto scams and, in recent months, a slew of hacks into decentralized finance (defi) firms that have lost crypto-investors billions of dollars in cryptocurrency.
The Federal Bureau of Investigations (FBI) is now advising defi platforms to increase their security measures in the wake of these hacks and has warned investors that they aren’t 100% safe on these platforms. From January to March 2022, hackers stole a whopping $1.3 billion in crypto, with nearly 87% of these funds being stolen from compromised defi platforms, the FBI said.
This includes an exploit that cost Axie Infinity’s Ronin bridge an estimated $625 million worth of cryptocurrencies. After shutting down the bridge and conducting two external and one internal audit, developers announced that the bridge was open again and users could now make deposits and withdrawals. All the users who lost their Bitcoin were compensated for their losses.
Cybercriminals are getting better at exploiting the vulnerabilities in these decentralized finance platforms, the FBI said on Twitter, and are stealing cryptocurrency from investors. They tend to launch these hacks by exploiting signature verification, manipulating trading pairs, or initiating flash-loan vulnerabilities, the FBI explained. As such, the federal agency urges investors to practice due diligence when they use blockchain defi platforms and to use well-established platforms that have conducted security audits.
The FBI also stated that defi platforms should begin running real-time monitoring, testing and analysis to keep an eye on their security situations. Furthermore, the bureau urged these platforms to create plans for alerting investors and dealing with hacking exploits when they are targeted by cybercriminals. The agency has had its eye on the crypto market for a while now and recently partnered with LinkedIn to fight criminals who use the platform to lure investors into crypto scams.
It is probable that by the time the FBI issued its warning, industry actors such as Canaan Inc. (NASDAQ: CAN) were already looking to strengthen themselves against cyberattacks targeting their different products, such as the crypto mining machines and supercomputing chips that they make.
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