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The nearly $150bn “decentralised finance” sector of cryptocurrency markets faces serious security vulnerabilities that put it at risk of hacking and theft, according to the head of the world’s biggest crypto tracing 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 left their users’ assets at risk of attack.
“When you’re building a protocol in your mum’s basement, you don’t have a [chief security officer] from GCHQ [the UK intelligence and security organisation], for example,” he said.
“Everyone in onchain finance is just focused on [increasing value in the sector], rather than the security that’s actually locked on these platforms,” Levin added.
More than $140bn of crypto assets is held globally on DeFi protocols, according to data provider DefiLlama. Some of the biggest platforms have boomed in popularity this year as investors seek different ways to make money from their crypto tokens, such as lending them out.
DeFi groups are mostly start-ups launched by founders but some have grown to become multibillion-dollar businesses. Some of the biggest include Aave, which allows its users to lend and borrow their crypto tokens, while EigenLayer is backed by investors including Andreessen Horowitz and Coinbase’s venture arm, and allows token holders to “restake” their ether tokens to earn returns in the form of more coins.
But security has increasingly become a concern, as crypto hacks continue to rise.
On Monday, more than $100mn was siphoned from DeFi protocol Balancer, according to blockchain data companies, in the latest hack on this corner of the industry. Balancer said it experienced an “exploit” and was conducting a “thorough investigation”. Earlier this year, about $200mn was stolen from the Cetus Protocol, a decentralised 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 sent the price of bitcoin and other tokens to record highs.
Levin said it was concerning that the security of decentralised platforms “hasn’t really been considered by people who raise a bit of venture capital money”.
“That’s what’s concerning,” he added. “When I look at these protocols that got very successful, there are potential vulnerability points for people like DPRK [North Korea] to come in.”
The risks facing decentralised crypto finance are reflected in the broader industry, where hacks have hit a record high this year. About $2.2bn worth of crypto was stolen in the first half of 2025, according to Chainalysis, more than was taken in the whole of 2024. North Korean hackers stole $1.5bn from exchange Bybit in February, in the biggest-ever heist.
Chainalysis works with governments and companies to trace stolen crypto funds and manage their security. The company was valued at $8.6bn in 2022 and Levin said he was “not focused on a future fundraise” at the moment.
“Building onchain [decentralised exchanges], prediction markets, all of these require interacting with smart contracts and a new level of risk.”