Sweeping Government Regulations Likely Needed To Prevent More Crypto Hacks and Exploits: ZachXBT
Top on-chain analyst ZachXBT has sounded the alarm, warning that the cryptocurrency industry is at risk of being brought under strict government regulations unless it can find a way to prevent hacks and exploits. In a recent post in his Telegram channel, ZachXBT shared his insights gained from working with Bybit following their massive hack, which exposed the dark underbelly of the crypto space.
According to ZachXBT, spending long hours helping freeze funds for the Bybit hack has been eye-opening. He notes that the industry is "unbelievably cooked" when it comes to exploits/hacks, and that it's unclear if the industry can fix this problem on its own unless government regulations are put in place.
"Several 'decentralized' protocols have recently had nearly 100% of their monthly volume/fees derived from DPRK [Democratic People’s Republic of Korea] and refuse to take any accountability," ZachXBT said. This lack of transparency and accountability is a major concern, as it allows illicit activities to flourish.
ZachXBT emphasizes that the problem doesn't just lie with decentralized exchanges (DEXs). He notes that centralized exchanges' know-your-customer (KYC) policies have proven to be essentially useless in preventing massive hacks and exploits. "Centralized exchanges end up being worse," he says, "when illicit funds flow through them a few take multiple hours to respond when it only takes minutes to launder." KYT (know-your-transaction) is also flawed, ZachXBT argues, as DPRK laundering $1.4 billion from the recent Bybit hack has exposed how broken this system is.
Bybit suffered the largest attack in crypto history last month, reportedly perpetrated by North Korea's Lazarus Group. This incident highlights the need for stricter regulations to prevent such attacks in the future.
"KYC is just a honeypot for regular users bc of breaches/insiders and is useless in majority of cases due to purchased accounts," ZachXBT warns. The industry needs to take responsibility for its own security measures, or face the consequences of government intervention.
"It's not clear if this industry can fix itself unless the government forcibly passes regulations that hurt our entire industry," ZachXBT concludes. One thing is certain: the cryptocurrency industry cannot afford to wait any longer to address these issues. Sweeping government regulations may be the only way to prevent more crypto hacks and exploits in the future.
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