According to research, 2022 was the most successful year for cryptocurrency hacking. More than PS3.2bn was stolen around the world.
October saw the highest number of PS629m in one month – the largest single month.
It helped 2021 surpass its previous PS2.7bn record, though the number of hacks did fall slightly.
Chainalysis’ annual report, which tracks the data of banks and governments around the world, shows that most of the activity was driven by hackers from North Korea.
Kim Jong Un’s regime was repeatedly accused of hacking cryptocurrency to make money and evade sanctions. It even used stolen digital assets as a means to finance its missile program.
Chainalysis claims that hackers linked to Pyongyang, notably the criminal syndicate Lazarus Group, stole approximately PS1.4bn worth of cryptocurrency assets in 2022. This breaks their own record.
Researchers previously linked the group with the regime. However, it isn’t known if it is an internal operation or an external hire.
The crypto believed to have been stolen far exceeds North Korea’s annual exports. Latest figures from the Observatory of Economic Complexity show that it has exported PS115m in 2020.
Chainalysis stated, “It’s not a stretch to claim that cryptocurrency hacking makes up a substantial chunk of the country’s economy.”
From where was the money stolen?
Decentralised finance protocols were the biggest victims of crypto-hacks in 2022. This is when investors remove any middleman (like a bank or an exchange) and transfer funds between digital wallets.
It is becoming more popular because it is transparent. This means that people place more value in it following collapse of major crypto platform FTX.
Chainalysis claims that these DeFi protocols accounted for 82.1% crypto thefts by hackers in 2022. This is more than PS2.5bn.
David Schwed, a Halborn blockchain security company, stated that DeFi developers shouldn’t be afraid to look to centralised systems as inspiration to make themselves more secure.
He said, “You don’t have to move as slowly as a bank but you can borrow from banks.”
Crypto is ‘too risky’ to not regulate
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UK’s encouraging regulation plans
This report is coming as the UK government unveiled proposals to regulate crypto as the market seeks regain investor confidence after an extremely volatile period.
The plans would make the industry more aligned with traditional financial systems. Crypto platforms would be responsible for defining the requirements that a currency must meet to be allowed for trading.
The Exchanges will be held responsible for safely facilitating transactions as well as keeping customers’ assets safe.
Sky News spoke with Jordan Wain, UK public policies lead at Chainalysis. He said that the regulation was welcomed.
He said, “It is encouraging that there is a prominent thread of consumer protection running throughout these plans. This evidences a clear intent for combating potentially abusive behaviours.”
He warned, however, that the industry’s potential for growth and innovation must not be compromised by harsher regulations.
These proposals come less than one year after Rishi sunak stated that he wanted the UK to become a “global cryptocurrency asset hub”. They will be open for consultation before becoming law.