The US Department Of Justice's Hard Approach To DeFi Hackers And Exploiters

The United States Department of Justice (DOJ) is intensifying enforcement of hackers and exploiters of Decentralized Finance (DeFi). (photo: twitter @DOJPH)

JAKARTA - The Head of the United States Department of Justice's National Cryptocurrency Enforcement Center (DOJ) is intensifying enforcement of hackers and exploiters of Decentralized Finance (DeFi) amid the increase in illegal crypto activity over the past four years.

In a Financial Times report published on May 15, Eun Young Choi, director of the Department of Justice's National Cryptocurrency Enforcement Team (NCET), stated that the department is focusing on theft and hacking involving DeFi, particularly "chain bridges".

Choi said that this was a "significant matter" for DOJ, given North Korea's "state-backed hackers" have emerged as "the main actors in this space".

North Korean hackers stole between US$630 million (Rp9.3 trillion) to US$1 billion (Rp14.7 trillion) of crypto assets in 2022, as Cointelegraph reported in February.

DOJ announced Choi as the first NCET director in February 2022. Choi is a prosecutor with nearly a decade of experience at the institution.

At the time, a statement from the department explained that NCET would be a "focus point" of DOJ in dealing with cryptocurrencies, cybercrimes, money laundering, and confiscation. Although DOJ stressed that "mixing and stabbing services" would be a particular focus for the agency, at that time no mention of the DeFi platform.

Choi, who recently spoke at the Financial Times Crypto and Digital Assets Summit, confirmed that DOJ is targeting crypto companies that commit crimes or pretend not to know "to hide traces of transactions".

"DOJ targets companies that commit crimes or allow them to occur, such as facilitating money laundering," said Choi.

He explained that cracking down on the source - the platform itself - will have a "double effect" in terms of making it difficult for "criminals to easily profit from their crimes."

Choi also stressed that "scales and coverage of digital assets used in various illegal ways" have grown rapidly in the last four years. The DeFi platform has also experienced a series of attacks recently.

The biggest DeFi attack has so far been reported on March 13, in which Euler Finance faced a flash loan attack with a total of more than $196 million in Dai (DAI), USD Coin (USDC), fixed Ether (STETH), and Wrapped Bitcoin (WBTC) stolen.

Meanwhile, in November 2022, trading platform DeFi Mango Markets experienced exploiters who allegedly used its low liquidity to "drain funds".

The hackers deposited 5 million US dollars (IDR 73.9 billion) of their own money on the platform, increasing the price of Mango native tokens (MNGO) from 0.03 to 0.91 US dollars and increasing their MNGO holdings to 423 million US dollars (IDR 6.2 trillion).

From there, the exploiters managed to get a loan of 116 million US dollars (Rp1.7 trillion) using several tokens on the platform, including Bitcoin (BTC), Solana (SOL), and Serum (SRM), which spent all of Mango Markets liquidity.