According to the recent Atlas VPN team findings citing CipherTrace research, DeFi related hacks make up 76% of all major hacks in 2021. In addition, many fraudsters have started fake DeFi projects to benefit from the crypto industry hype.
DeFi fraud and hacks combined for a total of $474 million lost in the first half of this year with DeFi hack losses reaching $361 million, surpassing last year’s total losses by 180%, while $113 million were stolen by DeFi fraudsters.
This year, the biggest DeFi hack happened in May when the PancakeBunny protocol faced a flash loan exploit that extracted $45 million worth of crypto assets. The immediate sale of these tokens made the price of BUNNY tokens sink from $146 to $6.
In June 2021, DeFi project WhaleFarm rug pulled $2.3 million from investors. After running just for a few days, the project’s anonymous developers vanished with the funds while their token lost 99% of its value.
Even though the first Ethereum-based protocol MakerDAO for DeFi was released in 2017, hacks abusing the system were not recorded until 2020. In 2019, money lost to hacks was mostly from phishing, ransomware, and other cyberattacks.
A year later, in 2020, DeFi hacks already made up one-quarter of all funds lost to hacks that year — $129 million. One of the biggest DeFi hacks that happened last year was the attack on Harvest Finance that resulted in a loss of over $24 million.
“The crypto industry has generated a lot of excitement, however, many newcomers are unaware of the risks. Lack of regulation in the crypto industry allows cybercriminals to thrive either by hacking less secured DeFi projects or by carrying out rug pull scams. For DeFi to become more legitimate, it is essential to establish security and business regulations,” said Cybersecurity writer and researcher at Atlas VPN, William Sword, in a statement.