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Crypto Criminals Are Now Targeting Centralized Exchanges

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By: Antonio Smith / August 18, 2024

Crypto Criminals Are Now Targeting Centralized Exchanges

  • There is a renewed interest in centralize crypto exchanges as cyber criminals are applying for jobs there, according to Chainalysis.
  • Photo by Martin Podsiad / Unsplash
  • It is a good year for cybercriminals so far, having stolen more than $1.58 billion from the start of the year until July. This represents an 84.4% increase in value stolen over the same period in 2023 according to a report by Chainalysis.
  • Crypto thieves seem to be going back to their origins by increasingly targeting Centralized Exchanges (CEXs) instead of focusing on DeFi protocols, which are less commonly used for trading Bitcoin.

  • This trend is especially evident with centralized exchanges like DMM, which lost $305 million. The DMM hack, which represents approximately 19% of the total value hacked in 2024, reportedly involved the theft of around 4,500 BTC.

Talking Heads: Are Centralized Exchanges Dying? ft. Chainalysis’ Joshua Foo
Chainalysis’s Joshua Foo talks self-custody, centralized exchanges and institutional investors.
 
  • To combat the increased security by centralized exchanges, attackers are now using more advanced social engineering tactics like applying for IT positions in an attempt to infiltrate into more established centralized exchanges, one of their key historical targets. The UN has recently reported that over 4,000 North Koreans have been employed by Western tech industry firms.

  • North Korean-linked hacking groups, most notably Lazarus Group, are notoriously responsible for some of the biggest thefts of stolen funds.
  • They are known for using sophisticated social engineering tactics to infiltrate crypto businesses, steal digital assets, and utilize advanced tools like Tornado Cash, a cryptocurrency tumbler to obtain the origin of funds to convert the stolen funds into cash.
  • India’s Biggest Crypto Exchange WazirX Hacked for $235M But Who’s Behind It?

    WazirX’s hack represents 46% of the exchange’s proof of reserves

  • However, not all is bad news. The report also noted that inflows into legitimate services have reached their highest levels since 2021, the last bull market peak. This positive trend indicates ongoing global adoption of cryptocurrency, with legitimate activity expanding at a faster rate than illicit activity on-chain.
  • “It is highly encouraging to see that criminal activity continues to become an ever-shrinking share of the crypto ecosystem. The growth of legitimate activity outpacing that of illicit activity on-chain demonstrates the continued transition of cryptocurrencies to the mainstream,” said Eric Jardine, Cybercrimes research lead at Chainalysis.

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