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US DOJ Ramps Up Efforts to Crack Down on DeFi Hacks and Thefts

The US Department of Justice is raising eyebrows over the rising trend of DeFi breaches.

A recent Financial Times article highlighted the DoJ’s characterization of these breaches and thefts as a “major concern.”

Beyond the wrongdoings of various malicious entities, there have been occurrences where DeFi platforms were specifically targeted by North Korean cybercriminals, leading to massive financial losses.

De.Fi Security’s report from January 2023 highlighted an alarming $49 billion in crypto losses in 2022.

Furthermore, another study indicated that a staggering 97% of all cryptocurrency thefts originated from DeFi platforms.

Of the total pilfered amount, North Korean cybercriminals were reportedly responsible for swiping $1.7 billion in crypto in 2022 alone.

Given these hefty thefts, the US DoJ is now intensifying its efforts to track down and apprehend DeFi culprits.

Department Of Justice Kicks Off a Manhunt For DeFi Bad Actors

As per the Financial Times, DOJ Director Eun Young Choi announced that the department would be zooming in on DeFi-related thefts and hacks, especially those involving chain bridges.

Choi emphasized the gravity of the situation by pointing out that North Korean “state-sponsored hackers” are emerging as the leading perpetrators behind these crypto breaches and manipulations.

Eun Young Choi holds the distinction of being the inaugural director of the DOJ’s National Cryptocurrency Enforcement Team (NCET).

Her appointment, announced on February 17, 2022, underscored her impressive credentials, showcasing nearly a decade of experience as a seasoned prosecutor.

The DOJ has pointed to a rise in the nefarious use of distributed ledger technology and digital assets by malevolent actors.

These advanced technologies are being exploited to perpetrate a range of illicit activities, encompassing drug trafficking, cyberattacks, hacking, extortion, and money laundering.

The DOJ’s NCET has been commissioned to monitor cybercriminal activities, including crypto heists, money laundering, and the enforcement of forfeitures.

While there wasn’t a direct reference to intensified actions against DeFi culprits, the department emphasized that “mixing and tumbling services” would be under the spotlight.

The DOJ Will Target Firms That Commit Or Facilitate Crimes, Choi

During her address at the Financial Times Crypto and Digital Assets Summit, Choi underscored the Department of Justice’s staunch resolve to clamp down on entities either actively engaging in illicit deeds or neglecting legal mandates.

She particularly spotlighted firms that aid in obfuscating transaction paths, thereby paving the way for money laundering and fostering other unauthorized activities.

Choi is of the opinion that by zeroing in on the roots of these crimes, a “ripple effect” can be induced, impeding wrongdoers from effortlessly reaping gains from their unlawful endeavors.

The NCET’s director also drew attention to the marked uptick in the misuse of digital assets for illegitimate purposes observed over the recent quartet of years.

Beyond the spate of DeFi breaches reported in 2022, 2023 hasn’t been immune either. A notable casualty was Euler Finance, which faced a staggering depletion of assets – including DAI, USDC, stETH, and WBTC – totaling $196 million on March 13.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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