DeFiMay 16, 2023

The US Department of Justice continues to fight cryptocurrency fraudsters. Will DeFi be safer?

The decentralized finance sector is again seeing an increase in inflows of funds from North Korean hackers.

In a Financial Times report published on May 15, Eun Young Choi, director of the National Cryptocurrency Enforcement Team (NCET) of the U.S. Department of Justice, stated that the department is currently heavily focused on theft and hackers operating in the decentralized finance space known as DeFi.

The U.S. Justice Department strikes at North Korean hackers

For the National Cryptocurrency Enforcement Team, this is a priority issue given the recent surge in activity by North Korean hackers, who are clearly sponsored by the Pyongyang regime. In view of these events, NCET plans to deal with them as soon as possible because, as Choi stressed, they are among the key issues in this worrying area.

It is estimated that North Korean hackers have so far stolen cryptocurrency assets worth between $630 million and as much as $1 billion in 2022. According to Cointelegraph data published in February this year, this is a record scale of theft that has not happened in the past. As a result, the US Department of Justice appointed Eun Young Choi, a prosecutor with nearly a decade of experience at the agency, as the first ever director of NCET a few months ago.

At the same time, the department's statement clarified that NCET will serve as a special unit of the US Department of Justice in the fight against cybercrime or money laundering in the area of digital currencies.

Choi, who recently had the opportunity to speak at the Financial Times Crypto and Digital Assets Summit, firmly confirmed that the US Department of Justice is currently specifically pursuing cryptocurrency companies that either commit a crime or turn a blind eye to cover up traces of criminal transactions.

– The US Department of Justice focuses primarily on companies that themselves commit crimes or enable and facilitate them. This is mainly about money laundering. Going after the source – the platform itself – will have a definite effect in making it harder for key hackers to easily profit from their crimes, Choi noted.

North Korean hackers go on the offensive

Moreover, the director of NCET emphasized that the growing scale and scope of digital currencies used in various illegal ways has significantly intensified over the last four years. Recently, DeFi protocols in particular have experienced a number of hacker attacks.


Total Locked-in Value (TVL) in DeFi, source: DappRadar

It is worth noting that the largest breach of the DeFi ecosystem that took place this year was reported on March 13, when the Euler Finance platform faced a hack, as a result of which it lost the equivalent of USD 196 million in Dai cryptocurrency, USD Coin, as well as staked Ethereum.