Cross-chain bridges have been the target of more than a few hacks this yearbut new data from blockchain analytics provider Elliptic alleges that one of them has been used to launder over $500 million in ill-gotten crypto assets.
According to a report on Wednesday, the cryptocurrency bridge RenBridge facilitated the laundering of at least $540 million in criminal proceeds since 2020 through a process known as chain hopping — converting one form of cryptocurrency into another and moving it across multiple blockchains..
Elliptic said that decentralized cross-chain bridges provide “an unregulated alternative to exchanges for transferring value between blockchains”.
Rogue states and hacker groups
For the most part, cross-chain bridges or blockchain bridges are used for legitimate purposes.allowing users to seamlessly move cryptocurrencies across blockchain networks.
Users typically deposit their tokens from one chain into the bridge protocol, which is locked into a contract, and then the equivalent of a parallel token on another chain is issued to the user..
However, Elliptic pointed out that these bridges have also been used by ransomware gangs, exploiters and hackers to launder their proceeds of crime. RenBridge accounts for at least $540 million of laundered revenue since 2020.
More recently, At least $2.4 million in crypto assets stolen during the Nomad hack on Aug. 2 passed through the cross-chain bridge, according to the firm.
Elliptic also noted that decentralized financial services (DeFi) assets worth at least $267.2 million have been laundered using RenBridge in the past two years.while a portion of the $80 million stolen from the Liquid Global exchange last year, allegedly stolen by North Korea, has gone through RenBridge.
The ransomware group Conti, who attacked the Costa Rican government in June, has also laundered more than $53 million through RenBridge so far..
Elliptic noted that blockchain bridges like RenBridge pose a challenge to authorities trying to crack down on individuals and groups using the emerging technology for illicit activities.
“Blockchain bridges like RenBridge pose a challenge for regulators as there is no central service provider to facilitate these cross-chain transactions,” he said..
In a June 30 status report from the Financial Action Task Force (FATF), the intergovernmental organization highlighted the growing risks associated with “chain jumping” or chain hopping, especially in the DeFi space:
“The rapid growth and evolution of the Defi sector is cause for concern as it could cause risks to accelerate and proliferate.”
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