DeFi protocols clocked $386.2 million worth losses in 2022: Blog
Reports suggest that 2022 is when sum total of crypto hackings crossed over $3.8 billion. However, it’s believed that not all hacks happened in a traditional sense, as stated by Chainalysis.
According to Chainalysis, bad actors took part in draining decentralised finance (DeFi) protocols without utilising the flaw in protocol’s code. Experts call these oracle manipulation attacks, which refer to bad actors’ utilisation of mass cryptocurrency amounts to enhance trading volume of low-liquidity tokens on the targeted DeFi protocol. Estimates suggest that DeFi protocols sustained $386.2 million worth losses in 41 different oracle manipulation attacks in 2022.
Based on information by Chainalysis, certain attackers have tried to make the point that oracle manipulation attacks shouldn’t be considered criminal. Avraham Eisenberg, the individual held responsible for a big oracle manipulation attack of 2022, argued on his actions being legal and showed a “profitable trading strategy.” Although, SEC mentioned that Eisenberg’s actions fall under the category of market manipulation.
Moreover, Chainalysis noted that SEC and CFTC both pressed market manipulation charges against Eisenberg, with DOJ bringing an indictment. Reportedly, these hackers won’t be permitted to avoid responsibility, even if the aimed protocol worked as required. Mango Markets also filed a lawsuit against Eisenberg over not indulging in “lawful bargaining” during bug bounty negotiation with Mango Markets DAO.
(With insights from Chainalysis)