FBI Warns Investors Against Increasing Cyber Crime in DeFi Platforms To Steal Cryptocurrency

The FBI warns the public about the increasing number of cybercrimes aimed at stealing crypto.

Investors are being warned by the Federal Bureau of Investigation (FBI) that cybercriminals are increasingly taking advantage of vulnerabilities in decentralized finance (DeFi) platforms in order to steal cryptocurrencies.

The attacks of these cybercriminals may be targeted to steal from these platforms, or it may target the users by stealing their crypto holdings.

In order to steal cryptocurrency from investors, cybercriminals have been seen by the FBI to be taking advantage of flaws in the smart contracts that regulate DeFi platforms.

The FBI also went to Twitter to post this public service announcement to spread the word to bring awareness to the threatening increase in crypto-related crime.

The FBI also encouraged investors to report the crime if they think they have been affected by it.

FBI Detects Methods Used by Cybercriminals

In order to steal cryptocurrencies and cause investors to lose money, cybercriminals are increasingly taking advantage of flaws in the smart contracts that control DeFi platforms.

Criminals online want to capitalize on the growing interest of investors in cryptocurrencies, in addition to the difficulty of implementing cross-chain functionality and the open source character of DeFi platforms.

According to the FBI, they identified three methods that cybercriminals use to attack these platforms. First, the FBI discovered that these individuals were manipulating cryptocurrency price pairs by taking advantage of a number of flaws.

Then, they carried out leveraged trades to steal about $35 million worth of cryptocurrency, evading slippage checks and profiting from inaccurate price calculations.

Second, the FBI discovered these actors after they withdrew all of the platform's investments through a signature verification flaw in the token bridge of the DeFi platform, causing hundreds of millions of dollars in losses.

Last but not least, the agency found evidence that these cyber criminals take a flash loan as part of their tactic. This action then leads to an exploit as it triggers the smart contracts of the DeFi platform.

Recent Count on Cryptocurrency Scams

According to a previous iTechPost report, the Federal Trade Commission (FTC) reported that between January 2021 and March 2022, a total of 46,000 American citizens reported losing more than $1 billion worth of cryptocurrency due to scams.

This report is consistent with the findings of the FBI's 2021 Internet Crime Report, which stated that tens of thousands of reports indicated that cryptocurrency investors lost more than $1.6 billion.

The Internet Crime Complaint Center (IC3) received 34,202 reports of various types of cryptocurrency-related crimes in the year 2021.

Despite the fact that this number was lower than the victim count of 35,229 that was reported to IC3 in 2020, the amount of loss that was reported in IC3 complaints increased from $246,212,432 in 2020 to $1.6 billion in 2021.

FBI's Recommendation To Investors

The FBI recommends preventive measures to the general public to prevent these types of crimes.

Be mindful of the possible risk that may be posed by open source solutions for identification and patching of vulnerabilities; they may contain malicious files that can be downloaded and will advance a compromise.

Make sure that the DeFi platform has undergone at least one code audit that was carried out by a third-party auditing firm.

Be cautious of DeFi investment promos that have extremely short timeframes for joining and that deploy smart contracts quickly.

Before investing, the FBI suggests that investors conduct research on protocols, smart contracts, and decentralized finance platforms and be aware of the specific risks associated with decentralized finance investments.