A recent report by cryptocurrency forensics and blockchain threat intelligence company Ciphertrace reveals that $100 million has been stolen from decentralized finance (Defi) this year. The report indicates that the poor percentage of volume in the second half of the year was attributed to the massive $281 million exchange hack of Kucoin that happened in October. Excluding the Kucoin incident, Defi accounted for more than 50 percent of the overall volume of theft and hack during the time period.
According to News.bitcoin.com, so far, the total of Defi protocol and exchange hacks amounted to about 21% of the total hack and theft volume. By comparison, the Defi hack volume was nearly negligible in 2019. “This boom is ultimately what attracted criminal hackers to Defi, resulting in the most Defi hacks in a year to date,” the report continues. According to Defi Pulse, the total value locked in Defi is currently $13.42 billion, which is an increase of almost 700% since the beginning of the year. Uniswap leads the pack, followed by Maker, Wbtc, Compound, Aave, and Curve Finance.
The U.S. Securities and Exchange Commission (SEC) and other global regulators are starting to pay more attention to Defi. “The EU has introduced Markets in Crypto-Assets (MiCA), a proposed regulation which, if passed, will ban decentralized exchanges from trading with any European Union citizens if they are not incorporated as a legal entity and have their registered office in a Member State,” the report detailed. The Financial Action Task Force (FATF) has been considering decentralized exchanges in its Guidelines and the Financial Crimes Enforcement Network (FinCEN) is applying the same legal considerations to DEXs as to bitcoin ATMs.