Crypto hacks on the rise in 2022, more than $1 billion stolen so far

Yahoo Finance reporter David Hollerith breaks down the economic toll of crypto hacks and fraud so far in 2022.

Video Transcript

RACHELLE AKUFFO: Welcome back to Yahoo Finance Live, everyone. As regulators around the world assess the risks and opportunities that come with cryptocurrencies, hackers have been busy. Yahoo Finance's own David Hollerith joins us now with more details. David. DAVID HOLLERITH: So far this year, hackers have made off with $1.2 billion, according to a report from the crypto security forum in Unify. So this amount of money is nearly eight times more than the $154 million that was lost in the first quarter of 2021. It's also 99% that's come from stolen money that has been taken via software exploits, where attackers have found a way to manipulate software, crypto software, by using either compromised passwords, falsified data, along with discovering some sort of combination of vulnerabilities in the project's code base. So, unfortunately, the trend isn't an anomaly. Experts I've spoken with have argued that it will likely increase in the near term and that the amount of money stolen actually in investment scams could wane. So of these incidents, a majority of the lost funds came from two events, specifically hacks against a newer type of crypto platform, which is known as a cross-chain bridge. Now a quick explanation on cross-chain bridges, they essentially allow people to transfer their cryptocurrency from one blockchain to another. In February, a bridge called Wormhole, which allows funds to be transferred from the Ethereum blockchain to Solana, lost about $326 million at the time of the announcement. And then last week, $625 million was lost at the time of the announcement from the bridge connected to the-- sorry, excuse me, the Ronin network, which is the blockchain that powers the crypto game, "Axie Infinity." Now a key here to both of these incidents, these two large bridge hacks, is that they're both backed-- they were both backed by significantly deep pocketed companies that have been able to either make investors whole in Wormhole's case, or at least, show signs that they are looking to go that route in the case of "Axie Infinity's" creator Skye Mavis, who sort of created the Ronin blockchain. So the difference here is that these are bigger exploits that are happening in this quarter of the year compared to this time last year. And there are less scams, but it's obviously a little bit more notable in that the amount of funds stolen are rising dramatically.