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The “decentralized finance” sector of cryptocurrency markets, estimated at nearly $150 billion, faces serious security vulnerabilities that expose it to the risk of hacking and theft, according to the head of the world’s largest cryptocurrency tracking company.
Jonathan Levin, chief executive of Chainalysis, told the Financial Times that the rapid growth of so-called DeFi platforms, which operate on blockchains and without intermediaries such as banks, had put their users’ assets at risk of attack.
“When you’re developing protocol in your mother’s basement, you don’t have a (chief security officer) from GCHQ (the British intelligence and security organization), for example,” he said.
“Everyone in blockchain finance is only focused on (increasing value in the sector), rather than the security that is actually locked into these platforms,” Levin added.
More than $140 billion in crypto assets are held globally on DeFi protocols, according to data provider DefiLlama. Some of the biggest platforms have gained popularity this year, as investors look for different ways to make money from their crypto tokens, such as by lending them.
DeFi groups are mostly start-ups launched by their founders, but some have grown into multi-billion dollar companies. Among the largest are Aave, which allows its users to lend and borrow their crypto tokens, while EigenLayer is backed by investors including Andreessen Horowitz and the venture capital arm of Coinbase, and allows token holders to “take back” their ether tokens to earn returns in the form of more coins.
But security has become increasingly a concern, as crypto hacks continue to rise.
More than $100 million was siphoned off the DeFi Balancer protocol on Monday, according to blockchain data companies, in the latest hack in this sector of the industry. Balancer said it suffered an “exploit” and is conducting a “thorough investigation.” Earlier this year, around $200 million was stolen from the Cetus protocol, a decentralized exchange, as hackers exploited security vulnerabilities.
Crypto markets are booming this year thanks to US President Donald Trump’s embrace of the industry, which has propelled the price of bitcoin and other tokens to record highs.
Levin said it’s concerning that the security of decentralized platforms “hasn’t really been considered by people raising a little bit of venture capital money.”
“That’s what’s worrying,” he added. “When I look at these protocols that have been very successful, there are potential points of vulnerability for people like the DPRK (North Korea).”
The risks facing decentralized crypto finance are reflected across the industry, where hacks have reached an all-time high this year. According to Chainalysis, approximately $2.2 billion worth of crypto was stolen in the first half of 2025, more than was stolen in all of 2024. North Korean hackers stole $1.5 billion from the Bybit exchange in February, in the largest heist ever.
Chainalysis works with governments and businesses to trace stolen crypto funds and manage their security. The company was valued at $8.6 billion in 2022 and Levin said he was “not focused on any future fundraising” at this time.
“Building chains (decentralized exchanges) and prediction markets all require interaction with smart contracts and a new level of risk. »
