The crypto circle has been witnessing an increasing number of hacks and scams in the last few months, which has caught the attention of the FBI. On Friday, FBI Director Kash Patel issued a warning to crypto criminals saying the federal agency will find them and bring them to justice for taking advantage of the American people.
Patel’s warning came in the backdrop of another DeFi protocol reporting an exploit on Friday. Axelar, a cross-chain interoperability protocol, said that an isolated smart contract, ICS-20, located on the Secret Network side of their Cosmos IBC connection was breached for $4.67 million.
The Secret Network is a privacy-focussed blockchain that was connected to Axelar via the Cosmos inter-blockchain communication (IBC) protocol.
Axelar said a vulnerability within the ICS-20 contract allowed the attacker to steal the crypto funds that were actively being bridged from the Axelar chain over to the Secret Network.
Upon identifying the exploit, Axelar said it disabled the bridge connection to halt further losses.
Highlighting that Axelar’s core protocol remains unaffected from the breach, the platform said, “We’re reaching out to the relevant exchanges and law enforcement agencies. No other IBC connections or Secret tokens appear impacted. No other Axelar integrations are affected.”
This incident adds to a long list of DeFi hacks that have drained an estimate of over $840 million. As per a report by Finextra, bridges protocols have been most hit targets by crypto criminals. In recent weeks, the exploits of Kelp DAO and Drift Protocol among others have made it to the headlines, calling for a need for DeFi protocols to up their security games.
Other than exploits, malicious actors are also sharpening their scam skills, targeting unsuspecting crypto investors.
In April this year, the FBI released its annual internet crime complaint report that disclosed that crypto and AI scams are now costing Americans billions of dollars.
“Americans who submitted complaints involving cryptocurrency reported the highest losses, with 181,565 complaints totaling more than $11 billion,” the report said.
AI-fueled tactics like identifying loopholes in codes and generating deepfakes of prominent personalities promoting fraudulent schemes are helping crypto criminals get more advanced and proficient in their tactics.
For now, the FBI has not elaborated on the changes it plans to introduce to its internal systems to tighten the noose around AI-armed online scammers targeting the crypto community. The federal agency already uses AI and Machine Learning tools to identify crypto scammers and hackers by recognizing attack patterns and track illicit crypto funds.
