Elliptic reports that cross-chain cryptocurrency laundering has surpassed $7 billion
According to the most recent research from blockchain analytics platform Elliptic, criminal organizations, including the notorious North Korean hacking group Lazarus, are using decentralized exchanges (DEXs), cross-chain bridges, and coin swap services to launder an estimated $7 billion in illicit digital assets. This sum is higher than anticipated and demonstrates the growing dominance of cross-chain illegal activity.
The Rise of Cross-Chain Crime
This increase in cross-chain activity can be related to criminals’ growing desire for the characteristics provided by such platforms, specifically anonymity and stability. According to Elliptic’s recently released “State of Cross-chain Crime” report, even sanctioned entities and terrorist organizations currently control over 80 crypto assets scattered across more than 26 blockchains.
The Changing Landscape of Crypto Laundering
The study talks about cross-chain criminal behaviour, which is the act of trading cryptocurrencies between tokens and blockchains. This is an important part of how cryptocurrency money laundering is changing. Criminals use this method to hide money they’ve made in various illegal ways, like fraud and crypto theft.
The diminishing reliance on Bitcoin for unlawful activity is a fundamental shift in the crypto-criminal world. While Bitcoin accounted for 97% of illicit blockchain activity in 2020, this figure dropped to 19% in 2022. Criminals are increasingly adopting cryptocurrencies such as Tether (USDT) and USD Coin (USDC) due to their perceived ease of acquisition.
Criminals are utilizing cross-chain tactics to elude law enforcement and changing the cryptocurrency they use. This enables them to conceal their illegally obtained wealth and avoid detection by law enforcement. The traditional types of crypto crime are being progressively targeted by enforcement measures, such as seizures and punishments, causing a process known as “crime displacement,” when fraudsters shift to cross-chain crime as a practical substitute.
The Lazarus Group and Complex Techniques
The Lazarus Group is the major contributor to the total amount of illegal funds laundered through cross-chain bridges and ranks third in all cross-chain criminal activities, accounting for an astounding $900 million of the total $7 billion. More sophisticated cross-chain techniques are now being used by criminals to conceal their money laundering operations, including derivatives trading and limit orders.
Elliptic’s chief scientist and co-founder, Tom Robinson, offered his opinion: “Over the past ten years, Elliptic has helped decrease risk and brought transparency to blockchains by identifying and tracking illegal actions inside the crypto ecosystem. With the novel insights from our Holistic blockchain analytics capabilities announced last year, we’ve discovered that cross-chain crime is rising as bad actors continue taking advantage of decentralized exchanges (DEXs), cross-chain bridges, and coin swap services.
Scams and Hacks on the Rise
Criminals have increased their efforts to steal tokens through hacks, exploits, and frauds as the volume of crypto assets laundered through DEXs, cross-chain bridges, and coin exchanges continues to rise. Hackers and con artists stole almost $332 million alone in September, and one attack cost about $200 million in losses.
This worrying trend highlights the necessity for ongoing oversight and regulation within the cryptocurrency sector to stop illegal activity and safeguard users and investors.
In conclusion, there is an increasing threat to the cryptocurrency ecosystem, as seen by the cross-chain criminal activity’s quick growth and the $7 billion that has been laundered through multiple crypto channels. The employment of complicated schemes by criminals, their shifting focus away from Bitcoin, and their evolving tactics call for more vigilance and regulatory actions. As the crypto market develops, safeguarding users and investors from these hazards needs to be a key focus.