New research shows 2022 will be the biggest year ever for cryptocurrency hacks, with more than £3.2 billion stolen globally.
In October alone, £629 million was stolen, a record for a single month.
It helped dwarf the previous high of £2.7bn in 2021 for the full year, although the total number of hackers fell slightly.
Chainalysis, a blockchain analytics firm whose data is used by governments, banks and corporations around the world, said in its annual report that the activity was largely driven by North Korea.
Kim Jong Un’s The regime has been repeatedly blamed Hack cryptocurrency to make money and evade international sanctionseven using stolen digital assets funding its missile program.
Chainalysis said that in 2022, hackers linked to Pyongyang – notably the criminal syndicate Lazarus Group – stole an estimated £1.4bn in crypto assets, smashing their own record.
Researchers had previously linked the group to the regimealthough it is not known whether it is part of the government’s own operations or hired from outside.
The amount of cryptocurrencies believed to have been stolen vastly exceeds North Korea’s total annual exports, which the latest figures from the Observatory of Economic Complexity put at £115 million in 2020.
“It’s no exaggeration to say that cryptocurrency hacking accounts for a significant portion of the U.S. economy,” Chainalysis said.
Where was the money stolen from?
The biggest victims of cryptocurrency hacks in 2022 will be in decentralized finance protocols, which are basically investors cutting out middlemen — like banks or exchanges — and moving funds directly between digital wallets.
It is becoming more popular because it is considered more transparent and people place more importance on the following The Collapse of Major Crypto Platform FTX.
But according to Chainalysis, these so-called DeFi protocols account for 82.1% of all cryptocurrencies stolen by hackers in 2022, totaling more than £2.5 billion.
David Schwed of blockchain security firm Halborn said DeFi developers shouldn’t be afraid to look to traditional centralized systems for inspiration to make themselves safer to use.
“You don’t need to move slowly like a bank, but you can borrow from what the bank does,” he said.
Cryptocurrency ‘too dangerous’ to regulate
UK investors lose £1m in FTX crash
UK’s ‘encouragement’ regulatory scheme
The report comes as the UK government Publish proposal to regulate cryptocurrenciesas markets try to restore confidence among investors spooked by an unusually turbulent period.
Under the plan, the industry would be brought more in line with the traditional financial system, with crypto platforms tasked with defining the requirements a currency must meet before being allowed to trade.
The exchange will also be responsible for safely facilitating transactions and safeguarding customer assets.
Jordan Wain, UK head of public policy at Chainalysis, told Sky News the regulation was welcome.
“It’s encouraging to see the consumer protection threads highlighted in these programs, which demonstrates a clear intent to address potential abuses,” he said.
But he warned that stricter regulations must not compromise the industry’s “innovation and growth potential”.
The proposals come after Rishi Sunak said he wanted the UK Become a “Global Encryption Asset Center”will be consulted before going into effect.