FBI Warns About Decentralized Finance Exploits and the Losses Associated With Them
The United States Federal Bureau of Investigation (FBI) has issued a public service announcement about exploits attackers have recently used to steal cryptocurrency from investors that put money on decentralized finance (defi) platforms. The organization also advised crypto investors to do their own research and verify that the decentralized finance platforms chosen were audited by independent parties.
Defi Platforms Under the Eye of the FBI
The FBI has begun to notice the attention scammers are giving to decentralized finance (defi) platforms in order to exploit their operations. The bureau has issued a public service announcement warning investors and defi platforms about this development, and issuing recommendations to try and prevent these exploits from happening.
The FBI has observed three recent hacks, by which attackers have managed to compromise these decentralized finance protocols: initiating flash loans, exploiting signature verifications to empty cross-platform bridges, and manipulating crypto price pairs by exploiting oracles used to update the price of a cryptocurrency asset in real-time. These exploits reportedly caused defi platforms and their investors to lose $358 million.
Advice Issued to Defi Platforms and Investors
While the service announcement does clarify that investments carry risk and that investors in these platforms should seek advice from financial advisors, the FBI also issues a set of recommendations for avoiding questionable defi sites.
These recommendations include researching the platforms before putting funds behind them, investing only in platforms with audits from independent parties to minimize risk of exploits, and being aware of the changes that crowdsourced code underlying these platforms can suffer due to the many actors with access to such repositories.
However, not all recommendations were directed to investors, as decentralized protocols also share the responsibility of minimizing the occurrence and gravity of these events. The organization advises decentralized finance protocols to implement real-time analytics tools that serve to identify the possibility of a threat by examining and detecting suspicious actions, and also to design strategies to deal with such incidents, alerting investors in the process.
In July, the FBI warned about liquidity mining scams and the dangers of fake cryptocurrency apps designed to steal crypto from investors.
What do you think about the latest decentralized finance warning issued by the FBI? Tell us in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons, Mark Van Scyoc / Shutterstock.com
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Maximumhorrors.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.