Cross-Chain Bridges Overtake Crypto Mixers as Top Money Laundering Tool: Elliptic Report
Summary:
Blockchain analytics firm Elliptic reports a surge in cybercriminals' use of cross-chain bridges rather than crypto mixers for money laundering. This trend, characterized as "crime displacement," is attributed to the increasing difficulty in tracing illicit activities across complex cross-chain networks. DeFi services mostly don't require identity verification which contributes to their preference. Elliptic estimates that about $4 billion of illicit or high-risk cryptocurrencies have been laundered this way since 2020.
Elliptic, a blockchain analysis company, has reported a spike in cybercriminals migrating from cryptocurrency mixers to cross-chain bridges over the last 12 months. Its data reveals an almost total exploitation of cross-chain bridges for laundering pilfered cryptocurrency in June and July, a complete reversal from January to June 2022. A September 18 report from the company shed light on the trend - a result of 'crime displacement' allowing cybercriminals to adapt to new methods as existing strategies become over-patrolled. But, the shift to cross-chain bridges has exceeded initial expectations.
Elliptic's report outlines a time between July and September 2022 when the trajectory of laundered funds via mixers versus cross-chain bridges was upended. This change is tied to the U.S. Office of Foreign Assets Control's sanctions against Tornado Cash in the same period. Cybercriminals, including the Lazarus Group backed by North Korea, made a move to the Avalanche bridge after these sanctions. This same bridge was reportedly leveraged by the Lazarus Group to handle part of the funds robbed in Stake's September 4 exploit, amounting to $41 million, as stated by blockchain security entity CertiK.
Between November 2022 and January 2023, crypto mixers experienced a brief resurgence due to the downfall of RenBridge after its financial backer, Alameda Research folded due to FTX’s bankruptcy. According to Elliptic, RenBridge was instrumental in laundering $500 million during its operation. However, this was short-lived as criminals returned to utilizing cross-chain bridges in greater numbers.
Elliptic noted a possible reason for this trend could be the difficulty in tracing any illicit chain-hopping activities for blockchain analysts, as cross-chain bridges form a more intricate network. The firm also mentioned that stolen tokens are mostly traded via cross-chain bridges, and these decentralized finance services do not require personal identification checks.
Elliptic’s data estimate denotes that since 2020, cross-chain bridges have facilitated the laundering of roughly $4 billion in illegal or high-risk cryptocurrencies. This goes hand in hand with the rise in popularity of such laundering methods among cybercriminals, hindering the investigation process.
Published At
9/20/2023 4:45:09 AM
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