(Reuters) – Losses from theft, hacking and fraud in "decentralized financing" or DeFi, a thriving segment of the cryptocurrency sector, reached an all-time high in the first seven months of the year, a report by cryptocurrency intelligence company CipherTrace showed on Tuesday.
However, losses from crime in the total cryptocurrency market fell sharply to $ 681 million at the end of July, compared to $ 1.9 billion for the whole of 2020 and $ 4.5 billion in 2019.
The decline in crypto-crime overall reflected the industry's growing maturity and greatly improved security infrastructure, investors said.
The DeFi sector, on the other hand, recorded criminal losses of a record $ 474 million from January to July.
DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable the lending of cryptocurrencies outside traditional banks.
"It should come as no surprise that when the DeFi ecosystem expands, so is DeFi crime," Dave Jevans, CEO of CipherTrace, said in an email to Reuters.
“Only eight months into 2021
Locked-in value – the total number of loans on DeFi platforms – was $ 80.4 billion on Monday, down from $ 86 billion in mid-May, DeFi Pulse data showed, but increased more than 600% from $ 11 billion dollars in October last year.
There are two types of DeFi violations: hacking of a DeFi protocol by outsiders, or a "carpet move" by insiders, CipherTrace said. A "matte pull" occurs when crypto developers abandon a project and run away with investors' money.
The majority of 2021 DeFi crimes appear to have been committed by outsiders as hackers, accounting for $ 361 million, or 76%, of all DeFi-related crime. The remaining 24% is carpet that counts over 113 million dollars at the end of July.
On Friday, the US Securities and Exchange Commission said it had sued lender Blockchain Credit Partners and two of its top executives for taking in $ 30 million through alleged fraudulent offers. The case is the SEC's first with securities in the DeFi space.