Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Analysis: Decentralised finance - Latest front in crypto's hacking problem

Analysis: Decentralised finance - Latest front in crypto's hacking problem

For most of the 13-year life of cryptocurrencies, exchanges were the epicentre for cyberheists. Now, a bigger hacking risk in the growing sector has exploded into view: peer-to-peer crypto platforms.

One such site, Poly Network, was at the centre of a $610 million crypto theft last week, one of the biggest ever. Within days of the heist, the decentralised finance (DeFi) platform said the “white hat” hacker or hackers had returned nearly all the loot.

The unusual ending to the Poly Network saga belies fast-emerging risks in this growing corner of crypto, where an estimated $80 billion or more is held, interviews with industry executives, lawyers and analysts show.

DeFi sites allow users to lend, borrow and save – usually in cryptocurrencies – while bypassing the traditional gatekeepers of finance such as banks and exchanges. Backers say the technology offers cheaper and more efficient access to financial services.

But the heist at Poly Network – previously a little-known site – has underscored the vulnerability of DeFi sites to crime.

Would-be robbers are often able to exploit bugs in the open-source code used by sites. And with regulation still patchy, there is usually little or no recourse for victims.

Centralised exchanges, which act as middlemen between buyers and sellers of crypto, had previously been the main targets of crypto cyberheists.

Tokyo-based exchange Mt.Gox for instance collapsed in 2014 after it lost half a billion dollars in hacks. Coincheck, also based in Tokyo, was hit by a $530 million heist in 2018.

Many major exchanges, under the regulatory spotlight and striving to attract mainstream investors, have since bolstered security and heists on such scale are now relatively rare.

Less secure


An onus on security at major platforms such as Coinbase Global Inc (COIN.O) has pushed less-secure venues to the sidelines, said Ross Middleton, chief financial officer at DeFi platform DeversiFi.

“What’s happened is the big exchanges have got really good (on security) and the smaller exchanges aren’t around anymore,” he said. “The frontier is definitely DeFi now.”

Losses from crime at DeFi platforms are at an all-time high, crypto intelligence firm CipherTrace said last week, with thieves, hackers and fraudsters making off with $474 million from January through July.

The spike came as funds poured into DeFi, mirroring flows into crypto as a whole. According to DeFi Pulse the total value held at such sites is now more than $80 billion, compared with just $6 billion a year earlier.

DeFi specialists say security risks tend to lie at newer sites which may run on less secure code.

“There is a widening security and risk gap between old, battle-tested DeFi protocols, and new, untested DeFi protocols,” said Rune Christensen, former head of the body behind high-profile DeFi application Maker.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
×