The Federal Bureau of Investigation (FBI) has released a warning to investors about the increasing exploitation of DeFi platforms. This tweet was a public service announcement for the investors to warn them of the risks associated with their funds placed on DeFi platforms. Moreover, the investigation authority also said that any suspected cybercrime victim should contact the local field office or the Internet Crime Complaint Center.
The #FBI warns that cyber criminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal investors cryptocurrency. If you think you are the victim of this, contact your local FBI field office or IC3. Learn more: https://t.co/fboL1N17JN pic.twitter.com/VKdbpbmEU1
— FBI (@FBI) August 29, 2022
FBI stated that investors should conduct thorough research to evaluate DeFi platforms before pouring their funds into them. Previously, many investors have lost their assets due to the exploitation of a DeFi platform. According to an estimate, around $1.6 billion has been stolen from DeFi platforms so far in 2022.
FBI Advises DeFi Platforms to Incorporate Real-Time Analytics and Monitoring
FBI stated that hackers and criminals are exploiting vulnerabilities in the smart contracts of DeFi platforms to steal crypto assets. Furthermore, the FBI termed the increasing interest of consumers in the crypto space to be the reason for increased DeFi attacks. Another reason given by the authority was “the complexity of cross-chain functionality and open source nature of DeFi platforms.”
Recent data shows that around 97% of stolen crypto in the first quarter of 2022 was sucked out of DeFi platforms. FBI also listed some tactics in DeFi attacks. These included flash loan attacks, signature verification vulnerability, and manipulating crypto price pairs. Many platforms have lost millions of dollars due to these attacks.
Digital assets like cryptocurrencies have a high level of risk. Therefore, crypto service-providing platforms should have strong security protocols and safeguard measures. The FBI suggests that investors who are uncertain about the risk management of a platform should take the advice of a legal consultant. Also, they should educate themselves about the risks linked with digital assets.
Additionally, investors should consider the functionality of smart contracts and the overall operability of the DeFi platform. For this, they can also consult the reports of independent auditors. Code audits have the analysis of possible vulnerabilities in a platform. Thus, making the decision easier.
On the other hand, DeFi platforms should conduct real-time analytics along with rigorous code testing. FBI urges that these measures can enable a platform in identifying any code vulnerabilities. Thus, the platform can effectively address the issue without bearing a significant loss. Lastly, DeFi platforms should also have vigilant response plans to alert investors. Thus, securing their assets in case of a hacking or exploitation attempt.