Loading...

US DOJ launches manhunt for DeFi hackers and thieves

TL;DR

  • The U.S. Department of Justice (DOJ) has increased its efforts to target criminal activities within the DeFi ecosystem.
  • The increased use of crypto for illegal activities has put the industry in a tough regulatory place.
  • North Korea’s hackers steal billions in crypto, putting investors’ investments at risk.

Washington, D.C. – The U.S. Department of Justice (DOJ) has recently escalated its efforts to target criminal activities within the decentralized finance (DeFi) space. With an increasing number of thefts and hacks taking place in the digital currency ecosystem, the DOJ is determined to safeguard the integrity of the financial system and protect investors from fraudulent schemes. These measures are part of the DOJ’s ongoing commitment to combat cybercrime and ensure the security of digital assets.

DOJ’s increased focus on DeFi criminal activities

The DOJ has recognized the rising threat posed by criminal activities in the rapidly growing DeFi sector, which has seen tremendous growth in recent years. DeFi refers to the use of blockchain technology and smart contracts to provide financial services, such as lending, trading, and investing, without intermediaries like banks. 

While DeFi offers innovative solutions and opportunities, it has also become a target for malicious actors seeking to exploit vulnerabilities and defraud unsuspecting users. Amidst a four-year increase in illegal crypto activity, the United States DOJ crypto tsar is clamping down on Decentralized Finance (DeFi) hackers and exploiters.

In an article published by the Financial Times on May 15, Eun Young Choi, director of the Justice Department’s National Cryptocurrency Enforcement Team (NCET), stated that the department is concentrating on thefts and breaches involving DeFi, “particularly chain bridges.”

According to a report by Financial Times, the DOJ is actively pursuing individuals involved in DeFi-related thefts and hacks. The department aims to bring these criminals to justice and send a clear message that illegal activities within the digital currency space will not be tolerated. By cracking down on DeFi crimes, the DOJ seeks to foster a safer environment for investors and promote the responsible use of decentralized financial platforms.

Given that North Korean “state-sponsored hackers” have emerged as “key actors in this space,” Choi deemed it a “pretty significant issue” for the DOJ. Reports state that North Korean hackers seized between $630 million and $1 billion worth of crypto assets in 2022.

ChipMixer takedown and charges signal DOJ’s commitment to combatting digital currency crimes

One notable example of the DOJ’s efforts is the recent ChipMixer takedown. ChipMixer, a popular crypto-mixing service, was accused of aiding and abetting money laundering. 

Mixing services allow users to obfuscate the source of their digital currency transactions, making it challenging for law enforcement agencies to trace illicit funds. The DOJ’s successful intervention, in this case, demonstrates its determination to dismantle criminal networks that exploit digital currencies for money laundering purposes.

The DOJ’s actions against ChipMixer highlight its commitment to disrupting criminal activities associated with digital currencies. The takedown of this mixing service sends a strong message that money laundering through digital assets will not go unchecked. ChipMixer’s alleged facilitation of money laundering not only undermines the integrity of the financial system but also poses a significant risk to national security.

Furthermore, the DOJ’s actions against ChipMixer reflect a broader effort to ensure that digital assets are not exploited for criminal purposes. The department acknowledges the transformative potential of blockchain technology and cryptocurrencies but emphasizes the need for responsible innovation and compliance with existing laws. 

Through strategic enforcement actions and collaborative partnerships with international counterparts, the DOJ aims to establish a robust framework that balances innovation with regulatory oversight in the digital currency ecosystem.]

Crypto hacks surge in 2023

Choi, who recently spoke at the Financial Times Crypto and Digital Assets Summit, reaffirmed that the DOJ is pursuing crypto firms that either engage in criminal activity or turn a blind eye in order to “obscure the trail of transactions.” She said

The DOJ is targeting companies that commit crimes themselves or allow them to happen, such as enabling money laundering.

Choi

She explained that going after the source — the platform itself — will have a “multiplier effect” by making it more difficult for “criminal actors to profit easily from their crimes.” DeFi platforms have been the target of multiple attacks in recent times.

image 581

On March 13, the largest DeFi breach so far this year was reported, with over $196 million in Dai, USD coin, staked Ether (stETH), and Wrapped Bitcoin (WBTC) stolen from Euler Finance. In November 2022, an exploiter allegedly took advantage of Mango Markets’ limited liquidity to “drain funds.”

The hacker deposited $5 million of their own funds to the platform, causing the price of its native Mango (MNGO) token to increase from $0.03 to $0.91 and their MNGO holdings to increase to $423 million. The exploiter was then able to obtain a $116 million loan using several tokens on the platform, including Bitcoin.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Share link:

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

Most read

Loading Most Read articles...

Stay on top of crypto news, get daily updates in your inbox

Related News

How stablecoins are shaking up parallel financial networks
Cryptopolitan
Subscribe to CryptoPolitan