Amid an unprecedented surge in illicit cryptocurrency activities over the last four years, the U.S. Justice Department’s top-ranking cryptocurrency official underscored the escalating severity of this issue, mainly focusing on state-sponsored hacking activities initiated by North Korea. It also pays special attention to DeFi exploits.
The Battle Against DeFi Cybercriminals
The U.S. Justice Department’s (DOJ) appointed Cryptocurrency Champion is intensifying efforts to combat cybercriminals exploiting Decentralized Finance (DeFi) platforms. The drive comes as illicit crypto activities rise alarmingly, painting a concerning picture for global finance.
In a report by the Financial Times dated May 15, Eun Young Choi, the Chief of the Justice Department’s National Cryptocurrency Enforcement Team (NCET), emphasized the team’s concentrated efforts on addressing thefts and cyber-attacks linked to DeFi, with specific attention on “chain bridges.”
Choi described the situation as a “particularly significant concern” for the DOJ, citing North Korean “state-sponsored hackers” as prominent players in this worrying scenario.
North Korean Cyber-Heists: A Growing Threat
North Korean cybercriminals reportedly pocketed approximately $630 million to $1 billion of crypto assets in 2022.
The DOJ named Choi – an accomplished prosecutor with nearly a decade of service at the agency – as the inaugural director of the NCET in February 2022.
The department’s statement announced that the NCET would serve as the central hub for the DOJ in its fight against cryptocurrency-related crimes, including cybercrime, money laundering, and asset forfeiture.
While the DOJ underscored that “mixing and tumbling services” would be a prime area of focus, it did not explicitly reference DeFi platforms at the time.
DOJ’s Mission: Tracing Illicit Crypto Transactions
Speaking at the Financial Times Crypto and Digital Assets Summit, Choi reaffirmed the DOJ’s mission to tackle crypto firms that either perpetrate crimes themselves or facilitate them by obscuring the transaction trails. She stated:
“The DOJ is resolute in its pursuit of firms that either commit these crimes or enable them to occur, such as facilitating money laundering.”
Choi proposed that targeting the source – the platform itself – could create a “multiplier effect,” making it increasingly challenging for criminal entities to reap profits from their illegal activities.
She further highlighted the expanding scale and scope of digital assets being used for a range of illicit activities over the past four years.
A Rising Tide of Attacks on DeFi Platforms
DeFi platforms have increasingly become the target of cyberattacks in recent times.
So far, the largest DeFi heist this year occurred on March 13, when Euler Finance fell victim to a flash loan attack, losing over $196 million in Dai, USD Coin, and other assets. In November 2022, Mango Markets, a DeFi trading platform, reportedly faced an exploiter who leveraged its low liquidity to “drain funds.”
The exploiter injected $5 million of their own money into the platform, inflating the price of its native Mango (MNGO) token from $0.03 to $0.91 and ballooning their MNGO holdings to a whopping $423 million.
As the DOJ strengthens its stance on crypto-related crimes, it is clear that the fight against DeFi platform exploitations remains a high-stakes battlefield in the ever-evolving world of digital finance.
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