Reading 3 min Views 4 Published Updated
The U.S. Department of Justice Crypto Enforcement Group is cracking down on hackers and exploiters of decentralized finance (DeFi) amid a four-year rise in illegal crypto activity.
In a Financial Times report published on May 15, Yoon Yong Choi, director of the U.S. Department of Justice’s (DOJ) National Cryptocurrency Enforcement Group (NCET), stated that the department is dealing with DeFi-related thefts and hacks and “especially chain bridges.”
Choi said it was a “pretty big problem” for the Justice Department, given that North Korean “state-sponsored hackers” have become “key players in this area.”
As Cointelegraph reported in February, North Korean hackers stole between $630 million and more than $1 billion in crypto assets in 2022.
The DOJ announced Choi, a prosecutor with almost a decade of experience in the DOJ, as the first director of NCET in February 2022.
At the time, the department’s statement explained that NCET would serve as a “clearing house” for the Department of Justice in the fight against cryptocurrencies, cybercrime, money laundering and forfeiture.
Justice Department Announces First Director of National Cryptocurrency Enforcement Teamhttps://t.co/PvJ6iRDQ8P
— Justice Department (@TheJusticeDept) February 17, 2022
Although the DOJ emphasized that the agency would focus on “blending and mixing services,” it did not specifically mention anything in regards to DeFi platforms at the time.
Choi, who also recently spoke at the Financial Times Summit on Cryptocurrencies and Digital Assets, confirmed that the Justice Department is prosecuting crypto firms that either commit crimes or turn a blind eye to “cover the trail of transactions.” She noted:
“The Department of Justice is prosecuting companies that themselves commit crimes or allow them to be committed, such as facilitating money laundering.”
She explained that going to the source, the platform itself, would have a “multiplier effect” in that “criminals won’t be able to easily profit from their crimes.”
Choi also stressed that “the scale and scope of the use of digital assets in various illegal ways” has increased significantly over the past four years.
Related: DeFi sees its biggest hack in 2023 as Euler loses $197 million: redefining finance
DeFi platforms have recently come under a series of attacks.
The biggest DeFi hack of the year was reported on March 13, when Euler Finance faced an instant loan attack stealing over $196 million in DAI, USDC, staked ether (StETH), and wrapped bitcoin (WBTC).
Meanwhile, in November 2022, on the DeFi trading platform Mango Markets, an exploiter allegedly took advantage of their low liquidity to “withdraw funds.”
Basically, the hacker injected $5 million of his own money into the platform to raise the price of MNGO from $0.03 to $0.91 and increase his MNGO holdings to $423 million.
From there, the exploiter was able to obtain a $116 million loan using several tokens on the platform, including Bitcoin (BTC), Solana (SOL) and Serum (SRM), resulting in the loan liquidating all of Mango Markets’ liquidity.