Chainalysis CEO Jonathan Levin has warned that the decentralized finance (DeFi) sector faces critical security risks, citing a wave of recent attacks and a lack of oversight across many blockchain-based platforms.
Levin said on Tuesday that the sector’s explosive growth has outpaced its ability to secure the billions of dollars locked inside its systems.
He said that many DeFi projects are built quickly and often without the kind of professional cybersecurity expertise seen in traditional financial institutions. He noted that small development teams are often focused on growth rather than protection, leaving user funds vulnerable. In his words, many developers are “building in their mum’s basement” rather than hiring experienced security professionals from organizations such as Britain’s Government Communications Headquarters (GCHQ).
According to data from DefiLlama, DeFi protocols now hold more than USD$140 billion dollars in crypto assets globally. Platforms offering decentralized lending, staking, and trading services have surged in popularity this year as investors seek new ways to earn returns on their digital holdings. However, the increased attention has also attracted sophisticated hackers.
For example, the DeFi protocol Balancer was hit by an exploit on Monday, resulting in losses exceeding USD$100 million dollars. The company said it is investigating the incident, underscoring a pattern of multimillion-dollar attacks that have shaken investor confidence in the sector.
While cryptocurrency markets have reached record highs under President Donald Trump’s administration, which has supported digital asset growth, Levin argued that many companies remain unprepared for cyber threats. He warned that state-sponsored hackers, including those linked to North Korea, could exploit weaknesses in DeFi systems to steal funds or disrupt markets.
Read more: Core Scientific votes down merger with AI cloud firm CoreWeave
Read more: Canada set to introduce stablecoin framework soon
Company has tracked fortunes moving across blockchains
Levin emphasized that venture-backed startups often prioritize fundraising and token value over platform integrity. He said that despite the influx of capital into DeFi, many projects have not invested in adequate protection.
Earlier this year, Levin discussed how blockchain technology has evolved into a core part of mainstream finance. He said traditional banks are increasingly viewing blockchains as public infrastructure essential to future financial operations. He also discussed the rapid adoption of stablecoins as a key shift in the industry.
Since Chainalysis was founded in 2014, the company has tracked hundreds of billions of dollars moving across blockchains. Levin noted that digital assets now include cryptocurrencies and also tokenized financial instruments managed by established financial institutions.
Chainalysis, a private blockchain analytics firm based in New York, works with regulators, governments, and crypto exchanges to monitor illicit transactions and improve transparency across the digital asset ecosystem.
Decentralized finance (DeFi) platforms have faced a growing number of cyberattacks, with billions of dollars lost since 2020. Unlike traditional banks, DeFi relies on smart contracts, which are self-executing code that handles transactions without intermediaries. Hackers often exploit vulnerabilities in these contracts to drain funds from liquidity pools or token holdings.
Some of the largest attacks in recent years display the scale of the problem.
Market analysts note the vote shows increasing scrutiny among investors in the cryptocurrency and digital asset industries.
Read more: CleanSpark outruns Microsoft to secure Wyoming AI and Bitcoin mining site
Read more: Canada set to introduce stablecoin framework soon
DeFi is consistently under attack
In 2022, the Ronin Network lost USD$625 million in Ethereum and USDC, an operation linked to North Korea’s Lazarus Group.
Similarly, Poly Network suffered a USD$600 million theft in 2021, even though authorities later recovered the funds. In 2022, the Wormhole bridge connecting Ethereum and Solana saw USD$325 million stolen due to a coding flaw. Smaller but significant attacks have also occurred, including Euler Finance’s USD$197 million loss in 2023 and Curve Finance’s USD$73 million exploit the same year. Most recently, Balancer reported a USD$100 million exploit in November 2025.
Auditing, bug bounties, and active community monitoring have stopped many attempted DeFi attacks before they succeeded.
However, the persistent threat from state-sponsored groups, such as North Korea, and independent cybercriminals keeps the sector at high risk. According to Chainalysis, over 70 per cent of crypto thefts in 2023 involved DeFi platforms.
Furthermore, experts warn that DeFi’s transparency and autonomy come with trade-offs. Without centralized safeguards like insured deposits, users bear direct risk. Consequently, security measures must evolve as the sector continues to handle billions of dollars in digital assets.
.
