With cybercrime increasingly hurting the DeFi sector, the US Federal Bureau of Investigation (FBI) is taking steps to warn investors and platforms about these risks, and is also recommending a set of precautions that could prevent them from losing their assets to criminals.
“Cyber criminals are increasingly exploiting vulnerabilities in the smart contracts governing DeFi platforms to steal cryptocurrency, causing investors to lose money,” the bureau said. “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.”
With this in mind, the FBI recommends investors implement the following measures to protect their assets:
- perform thorough research of DeFi platforms, protocols, and smart contracts before deciding on their investments, and remain aware of the specific risks involved in such investments;
- ensure the selected DeFi investment platform has carried out one or more code audits commissioned from independent auditors;
- stay alert to DeFi investment pools with highly limited timeframes to join and swift deployment of smart contracts, in particular without the recommended code audit;
- remain aware of the potential risk related to crowdsourced solutions to vulnerability identification and patching.
At the same time, the FBI cautions DeFi platforms to take the following precautions:
- implement real-time analytics, monitoring, and rigorous testing of code to allow quicker identification of vulnerabilities and reply to indicators of suspicious activity;
- develop and implement incident response plans that involve alerting investors of smart contract exploitation, vulnerabilities, and other detected suspicious activities.
A recent report by blockchain analysis company Chainalysis indicates that some forms of crypto-based crime, including hacking and theft of funds, have so far increased in occurrence this year. The company’s analysts claim that much of this can be attributed to the rise in funds stolen from DeFi protocols, a trend that began last year.
“Through July 2022, USD 1.9bn worth of cryptocurrency has been stolen in hacks of services, compared to just under USD 1.2bn at the same point in 2021,” the company said.
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