The DeFi summer of 2020 witnessed ‘rug-pulls’ left, right, and center.
DeFi Landscape Saw Major Crypto Thefts
Blockchain technology and cryptocurrency analysis firm CipherTrace recently released the 2020 Cryptocurrency Crime and Anti-Money Laundering Report.
The report posits that while 2019 and 2020 both saw a similar number of thefts, hacks, and frauds, the average value taken by cybercriminals in 2019 was about 160 percent higher than in 2020. This signifies a significant development for the cryptocurrency industry in terms of mature security mechanisms in place to safeguard investors.
As previously reported by BTCManager, 2020 witnessed the high-profile hack of cryptocurrency exchange KuCoin with hackers duping exchange users to the tune of $280 million worth of digital assets.
However, in November, the exchange cleared the air by saying it had retrieved 84 percent of the funds stolen from the platform.
Another important finding in the report speaks about the numerous but relatively smaller in size DeFi ‘rug-pulls’ that dominated the mid-year DeFi bull market in 2020. Close to 50 percent of crypto hacks in 2020 were related to DeFi protocols while nearly 99 percent of major fraud volume in the second half of 2020 could be attributed to the infamous ‘rug-pulls.’
What is a Rug-Pull?
For the uninitiated, these so-called rug-pulls are similar to the countless scams witnessed during the 2017 ICO euphoria. A rug-pull is similar to a pump and dump whereby a few investors liquidate their entire DeFi pool, subsequently leaving the remaining token holders with either no liquidity or tokens that are almost worthless in terms of value.
A total of 18 protocols were assaulted in 2020 which, according to CipherTrace, is testimony to “the most DeFi hacks in a year to date.” One of these was the attack on bZx protocol as reported by BTCManager where the hacker or group of hackers was able to steal more than 2,378 ether worth $645,000 at the time.
In similar news, BTCManager reported in July 2020 how major DeFi protocol Balancer found itself on the receiving end when hackers were able to exploit the platform and steal more than $500k worth of altcoins from its Statera (STA), and STONK (STONK) lending pools.