2022 Was a Record Year for Crypto Hacks, with $3.8 Billion Stolen

Per a recent study (1) from the blockchain intelligence firm Chainalysis, hackers stole around $3.8 billion in 2022, marking it a peak year for stolen crypto assets.

The research states that 82.1% of the money was taken from DeFi protocols, most commonly through bridge attacks that targeted flaws in the code. Lazarus Group, a group of hackers with ties to North Korea, stole around $1.7 billion out of the total during the year.

According to Chainalysis, with the fall of Tornado Cash, hackers have turned to a new crypto currency mixer known as Sinbad to wash away the ill-gotten gains from their criminal activities.

The Worst Year in Terms of Crypto Hacks

The analysis by Chainalysis indicates that the pattern of DeFi protocols being hacked, which first emerged in 2021, has become more widespread during 2022.

82.1% of the total, or around $3.1 billion, consisted of funds stolen via DeFi protocols. Yearly, the quantity of items stolen has increased by 73.3% versus the number stolen in 2021.

Source: Chainalysis

During the same period, bridge vulnerabilities contributed 64 percent of the $3.1 billion stolen from DeFi protocols. The hack of the Ronin bridge by Axie Infinity in March of 2022 was the most significant vulnerability of the year.

Hackers used a vulnerability in the bridge to steal $612 million and then, over the following months, started transferring the money through cash mixers such as Tornado Cash and Chip Mixer.

October 2022 was the worst month of the year due to hackers’ theft of around $775.7 million.

Interoperability between different blockchains is made possible through bridge protocols. They do this by placing assets on the original chain into a smart contract, creating comparable assets on the second chain. This makes it possible for cryptocurrencies to be transferred from one blockchain to another.

However, because these smart contracts become big centralized cash warehouses, they are a potential target for hackers because they may target holes that are intrinsic to the design of the code.

Most exploits may be attributed to the Lazarus Group

The cybercriminal group known as the Lazarus Group, with which the FBI has established a link and the government of North Korea, has been the most successful hacker of crypto currencies in recent years.

Lazarus established a new record in 2022 by plundering an astounding $1.7 billion using various hacking techniques.

According to Chainalysis, hacker organizations with ties to North Korea prefer to launder their money using custodial mixers instead of decentralized swaps, often known as DEXs.

Image Source: Chainlysis

After restrictions were placed against Tornado Cash in August 2022, hackers with ties to North Korea are said to have shifted their focus to another custodial mixer known as Sinbad.

Sinbad Custodial Mixer

Sinbad is a recently launched custodial Bitcoin mixer that began advertising its products on the BitcoinTalk board in October 2022. Sinbad was named after a fictional pirate ship. As seen in the graph below about the Chainalysis Reactor, investigators working for Chainalysis found in December 2022 that hackers with ties to North Korea were contributing payments to the service.

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