FBI Warning about DeFi

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After statistics showed the sector accounted for 97% of the stolen $1.3B in Q1, the FBI issued a warning about DeFi

FBI Warning about DeFi
FBI Warning about DeFi / Image Credit: CRYPKYP
Source: CryptoSlate
1661859073 30 Aug / 11:31

After discovering that 97% of the $1.3 billion was stolen using DeFi protocols during the first three months of the year, the U.S. Federal Bureau of Investigation (FBI) has warned against using these protocols.

The FBI reported that it had seen an increase in the number of hackers each year exploiting the difficulties of cross-chain transactions. The warning piece claimed that DeFi's share of the total monies has climbed by 72% annually and cited data from the crypto analytics firm Chainalysis.

The alert identified a few DeFi functionalities as being particularly vulnerable to attacks. Smart contracts are the first and most vulnerable, according to the bureau. According to the warning piece, during the first three months of 2022, investors and developers lost almost $3 million in cryptocurrency due to assaults on smart contracts.

Mechanisms for verifying signatures are second. They may be effectively manipulated to allow the extraction of all the cash contained in the protocol, which led to the theft of about $320 million between January and March.

The FBI also issued warnings regarding potential price pair manipulation, price oracle manipulation, evading slippage checks while trading with leverage, and profiting from errors in the price calculation. The FBI claimed that these assaults also cost the DeFi sphere cryptocurrency valued at almost $35 million.

A list of suggestions for investors and DeFi procedures independently followed the warning. The bureau advised investors to become familiar with DeFi protocols and their features, to research the protocols before depositing money, to look for potential hazards, and to review audit reports.

The FBI suggested real-time analytics, monitoring, and routine checks for the DeFi protocols. It was also mentioned that planning and rehearsing a response to potential situations would be advantageous.

In May 2022, Brian McColl, a TradingPedia technical analysis expert, spoke exclusively with CryptoSlate on the growing number of attacks on DeFi systems.

McColl claimed that the rise in attacks results from people’s interest in DeFi. It also contributed to FUD in the industry, which steadily reduced the number of new users entering the DeFi community.

TrustPedia experts believe this unfavorable perception of the DeFi initiatives has led to a progressive increase in the number of supporters of Central Bank Digital Currencies (CBDC). CBDCs seem secure and less vulnerable to attacks than uncontrolled DeFi protocols because governmental organizations host them.

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