In 2021, over $10 billion worth of user funds has been stolen as a result of fraud and theft on DeFi products. This translates into a 7x increase from last year.
In 2022, the UK tax authority opened 20 criminal investigations involving digital assets. This action has been prompted by a spike in money laundering and fraud.
It seems like the serene existence of decentralized finance has been an illusion, hasn’t it? But while these numbers run counter to the utopia of the crypto world, they still don’t reflect the whole picture of DeFi security and lawfulness.
With that said, let’s get a deep dive into the security issues of decentralized finance and popular scams known to us so far.
Journey into the DeFi past
Decentralized finance or DeFi is a set of specialized applications and financial services based on blockchain. It is also often heralded as a movement that aims to make finance decentralized and open to everyone.
That is, DeFi transactions do not require intermediaries like banks or any other kind of centralized processing. On this note, DeFi relies on the use of smart contracts, cryptography, and blockchain to automate processes and protocols, making it more efficient…
