From the Indian cryptocurrency firms setting shops in markets such as Dubai and the US to the FTX scandal – add to that post-Ethereum Merge scams frauds and crimes have been a part and parcel of the industry. Despite all this fraud seems to have lowered in 2022. As per a report by Chainalysis, a blockchain analysis firm, the fall is because of several economic factors that lead to shrinking digital asset prices. "Using cold wallets is another straightforward method that any of the blockchain and bitcoin experts will suggest. Cold wallets are physical devices that are not connected to the internet. There are blockchain-based smart wallets and contracts being developed that run on hash codes. They are highly effective as some features do not allow the alteration of data in any case. ," Bharat Patel, chairman, and director, Yudiz Solutions, a blockchain app developing company.
The report further noted that cryptocurrency crime declined by 15% in volume year-on-year as the sector went through a significant slowdown in the earlier months of 2022. However, Ronin Network's March 2022 breach, which enabled the theft of $615 million in cryptocurrency, has proven the continued security breaches in the digital asset world.
© Provided by The Financial Express Caption: Value received via type of crypto crime. Source: Chainalysis
Interestingly, as per a report by Chainalysis, darknet activity is 43% lower than last year.
As per industry experts, decentralised finance (DeFi) protocols are vulnerable to hacking. According to Chainalysis, 97% of all cryptocurrency stolen in the first three months of 2022 was from DeFi protocols. "2022 has witnessed a shift towards more cryptocurrency being stolen from DeFi platforms than ever before. The vulnerable structure of DeFi is due to its open-source code. This year, DeFi's weak ecosystem was highlighted due to the fall of cryptocurrency exchange FTX. Auros, a cryptocurrency trading firm lost 2,400 wrapped ether (wETH) DeFi loan," Robert Balazs, co-founder, and CEO, ByteX, a cryptocurrency exchange, said.
In addition, theft increased by 516%, accounting for $3.2 billion in illegal transactions, with the DeFi sector once more being a cause for concern. "The debacle that took place this year was mostly driven by the centralisation of resources in a Web3.0 setting. When we started off with the notion of true Web3.0, decentralisation formed the crux of it. Priorities got mixed up and it led to the saga that was witnessed across the globe," Swapnil Pawar, founder, Newrl, blockchain platform, added.
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