Last year was the worst on record for cryptocurrency heists, with hackers stealing as much as $3.8 billion, led by attackers linked to North Korea who netted more than ever before, a U.S.-based blockchain analytics firm said in a report on Wednesday.
The report by Chainalysis found hacking activity that “ebbed and flowed” throughout the year, with “huge spikes” in March and October. October was the biggest single month ever for cryptocurrency hacking, with $775.7 million stolen in 32 separate attacks, the report said.
The cryptocurrency market floundered in 2022, as risk appetite diminished and various crypto firms collapsed. Investors were left with large losses and regulators stepped up calls for more consumer protection.
At the time, Chainalysis and other firms confirmed to Reuters that North Korean-related accounts had lost millions of dollars in value. But that did not deter hackers.
North Korea-linked hackers such as those in the cybercriminal syndicate Lazarus Group have been by far the most prolific cryptocurrency hackers, stealing an estimated $1.7 billion worth of in multiple attacks last year, the report said.
“In 2022, they shattered their own records for theft,” it said. North Korea has denied allegations of hacking or other cyberattacks.
According to a panel of experts monitoring United Nations sanctions, North Korea has increasingly relied on hacking to fund its missile and nuclear weapons programmes, particularly as publicly declared trade dwindled under sanctions and COVID-19 lockdowns.
“It isn’t a stretch to say that cryptocurrency hacking is a sizable chunk of the nation’s economy,” Chainalysis said.
For the first time last year, U.S. law enforcement seized $30 million in stolen funds from North Korea-linked hackers.
“These hacks will get harder and less fruitful with each passing year,” Chainalysis predicted.
Targets in “decentralized finance” or DeFi, a thriving segment in the cryptocurrency sector, accounted for more than 82% of the cryptocurrency stolen in 2022, the report said.
DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable crypto-denominated lending outside of traditional banks.
Last year saw a record amount of crypto transactions related to illicit activity overall, reaching $20.1 billion, Chainalysis said in January.