Cross-chain bridges account for £1.6bn in stolen crypto funds

By Stephan Roth on Monday 8 August 2022

Alternative LendingDigital BankingCrypto

Cross-chain bridge hacks make up 40 per cent of the largest crypto heists of all time

Cross-chain bridges account for £1.6bn in stolen crypto funds
Image source: Michael Gronager/Jonathan Levin/Chainalysis.

Cross-chain bridge hacks account for an overwhelming majority (69 per cent) of all stolen funds in crypto this year, according to Chainalysis.

Cross-chain bridges connect different blockchains to one another, acting as a super highway for investors to transfer funds between different protocols. 

In the report,  13 separate hacks on cross-chain bridges are calculated to have led to £1.6bn in stolen funds this year, posting a "significant threat" to the trustworthiness of blockchain technology.

This analysis comes following, Monday's Nomad cross-chain bridge hack, which saw  £165m stolen from its platform. The Nomad cross-chain connects the Ethereum, Avalanche and Moonbeam (GLMR) blockchain platforms. 

The Nomad hack represents the seventh major cross-chain bridge heist this year, with other major exploits including the Wormhole and Ronin hack.

In March Axie Infinity, a blockchain gaming firm experienced a £514m hack of its Ronin side-chain, which connects its own blockchain to Ethereum's.  

Four weeks prior to the Ronin heist, attackers targeting the Wormhole, a bridge that links Ethereum and Solana, got away with £265mil pounds. 

Cross-chain bridges are a lucrative hunting ground for hackers since they often have a central storage point. Just like any bridge, cross-chains are weakest in their centre, where smart contracts holding a vast amount of funds remain in transit between blockchains. 

Worryingly, as cross-chains become so lucrative, they have become a "top target" for North Korean terrorists.  Chainylsis claim, that hacks associated with the socialist nation account for £830mil of stolen funds across the crypto space. 

When considering the top 10 crypto heists of all time, cross-chain hacks account for 40 per cent of the list. Only the PolyNetwork's titanic £505mil attack in August 2021 ranks higher than the Ronin side-chain hack, 

Other notable hacks include the Coincheck hack of 2018 and Mt Gox in 2014, where £440mil and £390mil in crypto were stolen. 

With the crypto market down over 50 per cent since its all-time high in November and the collapse of stablecoins Terra in May, regulators have become ever more vigilant of the threats posed by the crypto and DeFi industries. 

Last week, the UK's  Crypto and Digital Assets All Party Parliamentary Group (APPG), launched an inquiry into crypto regulation and the newly appointed chancellor of the exchequer introduced a Financial Services and Markets Bill, aimed to bring stablecoins and digital assets into the remit of UK regulators. 

 

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