Friday, 27 January 2023

Crypto News

FBI issues alert over cybercriminal exploits targeting DeFi

FBI issues alert over cybercriminal exploits targeting DeFi

The U.S Federal Bureau of Investigation (FBI) has issued a fresh warning for investors in decentralized finance (DeFi) platforms, which have been targeted with $1.6 billion in exploits in 2022. 

In an Aug. 29 public service announcement on the FBI’s Internet Crime Complaint Center, the agency said the exploits have caused investors to lose money — advising investors to conduct diligent research about Defi platforms before using them, while also urging platforms to improve monitoring and conduct m rigorous code testing.

The law enforcement agency warned that cybercriminals are out in force to take advantage of “investors’ increased interest in cryptocurrencies,” and “the complexity of cross-chain functionality and open source nature of Defi platforms.”

The FBI observed cybercriminals exploiting vulnerabilities in smart contracts that govern DeFi platforms in order to steal investors’ cryptocurrency. 

In a specific example, the FBI mentioned cases where hackers used a “signature verification vulnerability” to plunder $321 million from the Wormhole token bridge back in February. It also mentioned a flash loan attack that was used to trigger an exploit in the Solana DeFi protocol Nirvana in July. 

However, that’s just a drop in a vast ocean; according to an analysis from blockchain security firm CertiK in M, since the start of the year, over $1.6 billion has been exploited from the DeFi space, surpassing the total amount stolen in 2020 and 2021 combined.

FBI recommends due diligence, testing

While the FBI admitted that “all investment involves some risk,” the agency has recommended that investors research DeFi platforms extensively before use, and when in doubt, seek advice from a licensed financial adviser.

The agency said it was also very important that the platform’s protocols are sound, and to ensure they have had one or more code audits performed by independent auditors.

Typically, a code audit involves a review of the platforms underlying code to identify vulnerabilities or weaknesses which could be exploited.

According to the FBI, any DeFi investment pools with an “extremely limited timeframe to join” or “rapid deployment…

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