Investors lose $2bn to cryptocurrency hacks in 7 months –Report

*Crypto experts urge consumers to do their own research before investing, as investors don’t have the support of a traditional bank to fall back on in case of emergencies

Alexander Davis | ConsumerConnect

A recent report has shown that poor security system had opened the door for cryptocurrency thieves.

ConsumerConnect learnt with four months still left in 2022, consumers’ crypto losses have reached $2 billion in the first seven months of 2022, according to mid-year report from Chainalysis.

This is a significant increase from this same point in 2021, as experts found that crypto hacks were at $1.2 billion July last year.

The report points to decentralised finance (DeFi) as the primary reason for this increase in cryptocurrency hacks. Rather than going through trusted banks, DeFi programmes allow consumers to make crypto transactions with blockchain technology.

These programmes do not typically have strong security and privacy measures, which makes them susceptible to hackers, agency report said.

Eric Jardine wrote in the Chainalysis report that “DeFi protocols are uniquely vulnerable to hacking, as their open source code can be studied ad nauseum by cybercriminals looking for exploits (though this can be helpful for security as it allows for auditing of the code).

“And it’s possible that protocols’ incentives to reach the market and grow quickly lead to lapses in security best practices.”

Crypto experts have reason to believe that many of these hackers are from North Korea, report stated.

So far this year, North Korean hackers have stolen a total of $1 billion in crypto.

This includes $625 million that came from the video game Axie Infinity.

Crypto scams are declining, but….

Though crypto hackers are stealing more and more money, the Chainalysis report also discovered that fewer consumers are falling for crypto scams.

Both money generated from crypto scams and the number of scams that consumers fell prey to are 65% lower than what they were at this point last year.

Experts speculate that as Bitcoin prices have steadily declined over the course of the year, fewer people are interested in taking the risk with potentially volatile crypto investments.

While this helps in losing large sums of money, it also helps protect consumers from potential scams – which could cause them to lose even more money.

Because crypto remains unregulated, investors don’t have the support of a traditional bank to fall back on in case of emergencies.

Consumers are encouraged to do their own research before investing, while lawmakers are urged to continue interfering in stolen crypto cases.