The decentralized finance (DeFi) sector, which encompasses nearly $150 billion within cryptocurrency markets, is grappling with significant security vulnerabilities, heightening the risks of hacking and theft. Jonathan Levin, the CEO of Chainalysis— the global leader in crypto tracing—sounded the alarm in remarks made to the Financial Times, pointing out that the rapid scaling of DeFi platforms, which operate on blockchains without intermediaries like banks, has precariously positioned users’ assets.
Levin underscored that many protocols within this space are established in informal environments, often by individuals lacking extensive security expertise. He noted, “When you’re building a protocol in your mum’s basement, you don’t have a [chief security officer] from GCHQ.” This sentiment captures the prevalent focus on increasing the sector’s value over ensuring robust security measures.
According to DefiLlama, over $140 billion in crypto assets is currently held across DeFi protocols. The industry has witnessed a surge in popularity as investors explore novel avenues for generating returns on their crypto tokens, such as through lending. Notable platforms like Aave facilitate lending and borrowing activities among users, while EigenLayer, supported by major investors like Andreessen Horowitz and Coinbase’s venture arm, allows users to “restake” their ether tokens for additional coin returns.
However, the concern around security is becoming increasingly prominent as incidents of cyber breaches escalate. In a recent incident, over $100 million was reportedly drained from the DeFi protocol Balancer, marking yet another alarming event within the industry. Balancer is currently undertaking a thorough investigation into what it described as an “exploit.” Earlier in the year, a staggering $200 million was extracted from the Cetus Protocol due to similar vulnerabilities.
The cryptocurrency market has experienced a considerable upswing this year, bolstered in part by U.S. President Donald Trump’s favorable stance towards the industry, which has propelled the values of Bitcoin and other tokens to all-time highs. Levin expressed concern that the security of decentralized platforms is often overlooked by entrepreneurs seeking venture capital. He remarked, “That’s what’s concerning,” as he emphasized the potential threats posed by external actors, including those from state-backed entities like North Korea.
This compounding risk of cyber-attacks echoes a wider trend observable across the cryptocurrency landscape, with hacking incidents reaching unprecedented levels. Chainalysis reported that approximately $2.2 billion in cryptocurrency was stolen in the first half of 2025 alone, surpassing the total thefts recorded in all of 2024. The heist of $1.5 billion from exchange Bybit by North Korean hackers in February emerged as the largest known theft to date.
Chainalysis, which collaborates with governments and corporations to trace misappropriated crypto funds and enhance security, was valued at $8.6 billion in 2022. Levin indicated that his current focus is not on raising additional funds, but rather on the pressing challenges tied to the security and risk management of interactions involving smart contracts within decentralized exchanges and prediction markets.
