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FBI releases security tips for DeFi and crypto users

 


On August 30, 2022, the FBI issued an international alert about DeFi and crypto scams and the risks associated with the crypto platforms.


The US agency recommends doing thorough research before using DeFi platforms, smart contracts, and protocols. In this way, crypto investors could better assess the associated risks before making an investment. According to the FBI, investors should favor platforms whose codes have been audited at least once. The letter from the FBI states:


“Ensure that the DeFi investment platform has passed one or more code audits by independent auditors. A code audit typically involves a thorough review and analysis of the platform's underlying code. This can be used to identify security risks or vulnerabilities in the code that could negatively impact the performance of the platform.”


The FBI also stated that it was monitoring cybercriminals exploiting DeFi smart contracts. The criminals used, among other things, investment strategies or automated smart contracts. In these contracts, “an agreement between a buyer and seller is written directly in lines of code that exist on a decentralized blockchain network.” By exploiting these vulnerabilities, the cyber criminals have been able to capture profits that victims find very difficult to recover.


The FBI advises investors who suspect cybercriminals have stolen cryptocurrency to “contact the Internet Crime Complaint Center or your local FBI field office ”


DeFi hacks are becoming increasingly popular

According to the FBI, many scammers are taking advantage of the “complexity of cross-chain functionality and the open nature of DeFi ” to find potential victims.


“Cyber ​​criminals used vulnerabilities in DeFi platforms’ smart contracts to steal virtual currencies, thereby causing the loss of investor funds,” the agency explained. For example, the FBI observed a flash loan attack in which investors lost $3 million.


It is estimated that between January and March 2022, criminals stole $1.3 billion worth of cryptocurrencies . Around 97% of these thefts took place on DeFi platforms. In 2021 it was only 72% and in 2020 it was just 30%.


FBI gives recommendations for crypto platforms

DeFi users have the ability to borrow and lend assets similar to banks. However, these assets are uninsured and are more vulnerable to hacks and exploits as DeFi has hardly been regulated by the state until now.


The authority advises DeFi platforms to use analysis , monitoring and code testing to eliminate potential vulnerabilities that could lead to smart contract abuse.


In recent years, several consultants have recommended crypto companies to implement multi-factor authentication security software. Many experts agree that this is the safest and most sustainable approach. In practice, however, this procedure has not yet become established.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at their own risk.

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