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The U.S. Federal Bureau of Investigation (FBI) recently released a warning to investors that cybercriminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal cryptocurrency from investors. Finding that almost 97 percent of the $1.3 billion stolen in cryptocurrencies between January and March 2022 was from DeFi platforms, the FBI noted that this represents an increase from 72 percent in 2021.The warning also noted that the FBI has observed cybercriminals exploiting vulnerabilities in smart contracts governing DeFi platforms. The warning urges investors to research any DeFi platforms they use and to ensure that the DeFi platforms are secure.
An Avalanche-based lending protocol was recently the victim of such a hack. A blockchain cybersecurity firm reported that a hacker stole $371,000 worth of USD Coin using a smart contract exploit. The protocol later released a detailed statement about the incident, explaining that an “exploiter” deployed a custom smart contract that utilized a $51 million flash loan from Avalanche to artificially manipulate the pool price for a single block. After consulting security experts, the protocol developed a mitigation plan, notified law enforcement and paused the exploited market.
According to recent reports, blockchain analysts and intelligence officials have noticed that the Islamic State of Iraq and Syria (ISIS) has begun to use non-fungible tokens (NFTs) for recruiting and funding. The report describes an NFT “visible on at least one NFT trading website” that bears the ISIS emblem and is titled “IS-NEWS #01.” According to the report, although the ISIS-themed NFT does not appear to have been traded, its existence on the blockchain makes it nearly impossible to remove or to censor, unlike other online recruiting and messaging tools.
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