Sumary of Decentralized Finance (DeFi) Fraud in 2021 Is Up 600% Over 2020, Topping $10.5 Billion, Research Finds:
- According to a report published by crypto risk management firm Elliptic, fraud and theft of decentralized finance (DeFi) investments has surpassed $10.5 billion so far this year — that’s a 600% increase over all of 2020. DeFi is an automated method of banking and financing that runs on blockchain-based computer programming.
- Key DeFi weaknessesThe Elliptic report found that the main vulnerabilities of DeFi were programming design errors that produced software bugs that hackers exploited as well as outright theft from “trusted” founders and developers who turned out to be crypto-cons.
- “Decentralised apps are designed to be trustless in that they eliminate any third-party control of users’ funds,” said Elliptic chief scientist Tom Robinson in an official statement.
- Earlier this month, the San Francisco Federal Reserve branch posted a blog on its website that cited a report from Javelin Research which stated that total combined fraud losses climbed to $56 billion in 2020, with identity fraud accounting for $43 billion.
- Only trust projects with founders who have been in the crypto space for years with a good reputation on different ventures.