- The U.S. Department of Justice shifts focus to DeFi as hack attacks skyrocket.
- DeFi has suffered the most hacks in the space for the past four years.
- National cryptocurrency enforcement team to focus on hunting down DeFi hackers.
The top crypto authority at the U.S. Department of Justice has focused on hunting down DeFi hackers and thieves, stating its significance given the recent rise of North Korea’s “State Sponsored hackers.”
Due to the rise in DeFi hackers and exploiters, the department will take its time to hunt down the perpetrators.
In a report posted in Financial Times on May 15, Eun Young Choi, the director of the U.S. Justice Department’s National Cryptocurrency Enforcement Team (NCET), stated that the department would be shifting its focus toward theft and hacks in the DeFi space, with a particular interest in Chain bridges.
Young said that the issue of hackers in the DeFi space is an essential issue to the Department of Justice given that the North Korean hackers have been revealed to be sponsored by the state, with an estimate of $630 million to $1 billion worth of crypto assets stolen by them in 2022.
Choi Young was announced as the first director of the National Cryptocurrency Enforcement Team for the Department of Justice in 2022. At the time of the announcement, it was explained that the National Cryptocurrency Enforcement Team would serve as a focal point for the Department of Justice to tackle cybercrime cryptocurrency, forfeiture, and money laundering.
The Department of Justice highlighted the importance of mixing and tumbling services as a significant focus for the agency. However, they did not mention the inclusion of DeFi at the time.
The director, who recently gave a speech at the Financial Times Crypto and Digital Assets summit, reaffirmed that the Department of Justice focuses on crypto firms that either commit crimes or avoid confronting any obscure trails of transactions, enabling these crimes.
Choi explained that it would be more appropriate to go after the source, which are the platforms used to commit the crimes, in terms of making it difficult for criminal actors to profit from their organized crimes quickly.
The director emphasized the scale at which digital assets are used illegally, announcing that the scale has significantly risen over the last four years.
There has been an almost violent rise in DeFi attacks recently, with the most significant hack attempt being a flash loan with over $196 million in Dai USD coin and wrapped Bitcoin on Euler Finance.
An older attack was made in November 2022, when the DeFi trading platform, Mango Markets, had an exploiter take advantage of their low liquidity to drain their funds.
The hacker had first deposited $5 million of their own money to Mango markets, which drove up the price of their native token from $0.03 to $0.91, also increasing their MNGO holdings to a whopping $423 million.
After that, it was smooth sailing for the exploiter to acquire a loan for $116 million using several tokens on Mango Market, including Solana, Bitcoin, and Serum, eliminating the entirety of Mango Markets liquidity.