In an interview with the Financial Times (FT) published Tuesday (Nov. 4), Jonathan Levin said the rapid growth of these cryptocurrency platforms, operating on blockchains and without intermediaries like banks, had left their customers’ assets open to attack.
If you’re a company that is “building a protocol in your mum’s basement,” you may not have a chief security officer “from GCHQ,” Levin said, referring to the Government Communications Headquarters, the British intelligence and security organization.
“Everyone in onchain finance is just focused on [increasing value in the sector], rather than the security that’s actually locked on these platforms,” he added.
The FT notes that DeFi protocols hold upwards of $140 billion in crypto assets worldwide, according to data provider DefiLlama. Some of the biggest platforms have seen their popularity soar this year as investors look for new ways to generate money from their crypto tokens, like lending them out, the report added.
However, security is becoming a greater concern amid a rise in crypto hacks. For example, more than $100 million was funneled out of DeFi protocol Balancer on Monday (Nov. 3). The company has said it suffered an “exploit” and was conducting a “thorough investigation.”
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While crypto prices are at record highs this year due to President Donald Trump’s pro-digital asset administration, Levin told the FT he was concerned that the security of DeFi platforms “hasn’t really been considered by people who raise a bit of venture capital money.”
“When I look at these protocols that got very successful, there are potential vulnerability points for people like DPRK to come in,” he added, referring to North Korea.
PYMNTS spoke with Levin earlier this year about the maturation of blockchain technology, as well as the rise of its use in mainstream finance.
“Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on,” Levin, who is also Chainalysis’ co-founder, told PYMNTS’ Karen Webster.
He pointed to adoption of stablecoins as one of the biggest changes in blockchain usage, at least since Chainalysis set up shop. This monumental shift has seen hundreds of billions of dollars move across blockchains while being held with traditional financial institutions like banks or U.S. treasuries.
“When we started the business in 2014, that wasn’t yet a concept,” he said. “Cryptocurrency only meant blockchains that had native cryptocurrency tokens. Today, people are putting all types of financial instruments on the blockchain, including the U.S. dollar.”
