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Detectives who protect crypto from hackers make money

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Detectives who protect crypto from hackers make money

Growing threat

Crypto thieves have stalked the industry for most of its roughly decade-long existence, from the 2016 hack of the Bitfinex exchange to last year’s exploit of the PolyNetwork protocol.

But the problem has escalated recently, in part because a relatively new part of the ecosystem has become a juicy target: so-called crypto bridges, software platforms that allow coins designed for a blockchain to be used on another. Hacks on crypto bridges accounted for more than two-thirds of the total value stolen in the first seven months of 2022, Chainalysis estimates.

In March, hackers hit the Ronin Bridge connected to the popular online game Axie Infinity and seized cryptocurrencies worth around $600 million at the time, one of the largest at that time. day. The attack has been linked to the North Korean hacker group Lazarus.

Sky Mavis, the developer of Axie Infinity, was forced to compensate players who lost money. The incident was also a publicity nightmare for Sky Mavis, as many of those whose coins were hacked were gamers from low-income countries like the Philippines who played the game to bolster their meager paychecks.

The threat is not limited to bridges. Hundreds of millions of dollars have disappeared in exploits from other projects, like DeFi apps. Many of these efforts rely on so-called smart contracts — code that automatically executes transactions in an irreversible way — so design flaws can be particularly costly.

A hack, or even a major coding error, can spell the end of an app that developers have spent months or years building.

“These protocols are not just another service that can be interrupted for a period of time, for example, not being able to watch TV for a few hours or more,” said Stefano Schiavi, an investor at bitscale.vc, a supporter of cryptographic security. Immunefi office. When encryption protocols fail, “many people lose a significant portion of their savings, and often they even lose everything.”

The evolution of Web3, a version of today’s Internet based largely on crypto technology where ownership and control is expected to be more widely distributed, means applications will be increasingly interconnected and span many blockchains, said Lex Sokolin, chief economist at ConsenSys, which audits smart contracts. coded.

“I think the more complicated Web3 gets, the bigger the surface area for these exploits,” Sokolin said.

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