Home » The FBI warns DeFi to boost security as investors are losing billions in Crypto fraud

The FBI warns DeFi to boost security as investors are losing billions in Crypto fraud

31st Aug 22 3:16 pm

The Federal Bureau of Investigation (FBI) has issued a warning to decentralized finance (DeFi) platforms to improve their security protocols and to alert investors regarding platform vulnerabilities.

DeFi platforms, whose financial transactions aren’t carried out by third parties, have suffered a number of large-scale attacks this year. These includes the Ronin bridge exploit, in which almost $650 million was lost.

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Investors lost $1.3 billion in crypto in the first three months of this year alone. Of this amount, just under 97% was lost in attacks on DeFi platforms, the FBI stated, citing a report from Chainalysis, the leading blockchain analysis firm.

Most common exploits

The FBI wrote on the official website that the most common DeFi exploits involved trading pair manipulation, exploiting signature verification, or flash loan vulnerability. The FBI asked investors to sign up with DeFi platforms only after conducting due diligence.

Their platforms of choice either need a good reputation or, if they’re new, to have conducted audits. The FBI recommended DeFi platforms start instituting monitoring, analysis, and testing in real time and prepare plans to alert investors and fight exploits.

FBI and LinkedIn partner to combat crypto fraud

Recently, the FBI announced they had joined forced with LinkedIn to fight cybercriminals using the professional social network to lure unsuspecting users into cryptocurrency schemes.

Typically, scammers would create a fake profile and reach out to a potential “investor,” starting with general conversation and leading up to an offer to make a lucrative crypto investment.

Then, the criminal directs the user to send funds to a site the perpetrator controls, then drains the account. Losses have been as high as $1.6 million, a group of victims told CNBC.

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