Security Risks in DeFi Copy-Trading Bots: A Critical Warning for Investors

The DeFi copy-trading space has exploded in 2025, promising retail investors access to sophisticated strategies without the need for technical expertise. However, this rapid growth has been accompanied by a surge in malicious activity, particularly through compromised open-source tools. Recent campaigns like PyStoreRAT, a modular Remote Access Trojan (RAT) distributed via GitHub repositories, highlight how attackers exploit the trust users place in open-source projects. These threats are not theoretical: they directly target cryptocurrency wallets, governance systems, and trading infrastructure, with real-world financial consequences. Investors must now treat due diligence and security audits as non-negotiable components of their strategies.

The GitHub Supply Chain Threat: PyStoreRAT and Beyond

A coordinated malware operation in late 2025 leveraged GitHub repositories to distribute PyStoreRAT, a RAT designed to steal cryptocurrency wallet data and execute arbitrary payloads. Attackers created or reactivated dormant accounts to publish AI-generated projects mimicking legitimate tools, such as DeFi copy-trading bots and OSINT utilities. These repositories gained traction on GitHub's trending lists before malicious code was injected months later. The malware's sophistication includes evasion techniques-such as detecting antivirus solutions like CrowdStrike Falcon-and persistence mechanisms like disguised scheduled tasks including evasion techniques.

This campaign is part of a broader trend of supply chain compromises. For instance, fake repositories mimicking GORM providers and GPT wrappers have been used to inject malicious code that downloads and executes shell scripts. The tactics mirror those of the Stargazers Ghost Network, where artificial star and fork counts inflate a project's perceived legitimacy. By 2025, attackers have mastered the art of exploiting open-source ecosystems, blending technical obfuscation with social engineering.

Polymarket's Vulnerabilities: A Case Study in Systemic Risk

The risks extend beyond individual repositories. Polymarket, a prominent prediction market platform, faced a $7 million loss in early 2025 when a UMA tycoon manipulated oracle voting mechanisms to falsely settle a market tied to Ukraine's mineral deal. This governance attack exploited concentrated token holdings (25% of UMA voting power) to override decentralized checks, exposing the fragility of oracle-based systems. Separately, a Polymarket copy-trading bot was found vulnerable to SQL injection, allowing attackers to access user accounts and manipulate trades. These incidents underscore how both on-chain and off-chain vulnerabilities can cascade into systemic losses.

Broader Implications and Industry Responses

The DeFi industry's response to these threats has been uneven. Off-chain attacks, including compromised accounts and phishing, accounted for 55.6% of all incidents and 80.5% of stolen funds in 2025. Yet only 19% of hacked protocols used multi-sig wallets, and a mere 2.4% employed cold storage according to Halborn's 2025 report. Best practices now emphasize hardware security modules (HSMs), multi-factor authentication (MFA), and multi-party computation (MPC) solutions to mitigate single points of failure.

For code injection risks, the industry is increasingly adopting security-as-code practices, including continuous monitoring and runtime protection according to Cycode's 2025 report. Automated inventory and policy gates for open-source dependencies are also critical, given the prevalence of AI-generated code in 2025 according to Cycode's 2025 report. Meanwhile, tools like Flashbots and decentralized oracles (e.g., Orochi's zkDatabase) aim to reduce exposure to front-running and data manipulation according to Orochi's 2025 analysis.

A Call for Investor Vigilance

Investors in DeFi copy-trading bots must treat these tools as high-risk assets. Key precautions include:
1. Auditing smart contracts for reentrancy, access control, and BEV exploits according to Quilla Audits.
2. Verifying repositories by cross-checking code history, contributor activity, and dependency integrity according to Rescana's analysis.
3. Using hardware wallets and multi-sig solutions to limit exposure to compromised tools according to Blockchain Council.
4.

Monitoring transaction patterns with private relays and slippage controls to mitigate sandwich attacks according to Quilla Audits.

The stakes are clear: in 2025, over $1.6 billion was lost to access control failures, and $540 million to BEV exploits according to Blockchain Council. As attackers refine their methods, the onus is on investors to adopt a defensive mindset. Automated trading may promise efficiency, but without rigorous security measures, it risks becoming a vector for catastrophic losses.