NEW YORK (Reuters) - Losses from theft, hacks, and fraud in “decentralized finance” or DeFi, a thriving segment in the cryptocurrency sector, hit an all-time high in the first seven months of the year, a report from crypto intelligence company CipherTrace showed on Tuesday. But losses from crime in the overall cryptocurrency market dropped sharply to $681 million at the end of July, compared to $1.9 billion for the whole of 2020 and $4.5 billion in 2019. The drop in crypto crime overall reflected the industry’s growing maturity and much-improved security infrastructure, investors said. The DeFi sector, on the other hand, registered criminal losses of a record $474 million from January to July. DeFi applications, many of which run on the Ethereum blockchain, are financial platforms that enable crypto-denominated lending outside of traditional banks. “It shouldn’t come as a surprise that as the DeFi ecosystem expands, so are DeFi crimes,” Dave Jevans, CipherTrace’s chief executive officer, said in an email to Reuters. “Just eight months into 2021 and DeFi hacks, thefts, and frauds have already surpassed the total DeFi crimes from 2020. This means regulators around the globe are paying closer attention to DeFi specifically.” The value locked - the total number of loans on DeFi platforms - was $80.4 billion on Monday, down from $86 billion in mid-May, DeFi Pulse data showed, but up more than 600% from $11 billion in October last year. There are two types of DeFi crimes: the hack of a DeFi protocol by outsiders, or a “rug pull” by insiders, CipherTrace said. A “rug pull” occurs when crypto developers abandon a project and run away with investors’ money. The majority of DeFi crimes in 2021 appear to have been conducted by outsiders as hacks, making up $361 million, or 76%, of all DeFi-related crime. The remaining 24% are rug pulls tallying over $113 million at the end of July. Last Friday, the U.S. Securities and Exchange Commission said it charged lender Blockchain Credit Partners and two of its top executives for raising $30 million through allegedly fraudulent offerings. The case is the SEC’s first involving securities in the DeFi space. Our Standards: The Thomson Reuters Trust Principles.