a new investigation blockchain analytics and cryptocurrency compliance company Elliptic has revealed the extent to which cross-chain bridges and decentralized exchanges (DEXs) have removed barriers for cybercriminals.
In an Oct. 4 report titled “The state of cross-chain crime,” Elliptic researchers Eray Arda Akartuna and Thibaud Madelin delved into what they described as “the new frontier of crypto laundering.”. The report summarized that the free flow of capital between crypto assets is now freer due to the emergence of new technologies such as bridges and DEXs.
Cybercriminals have been using cross-chain bridges, DEXs, and currency exchanges to obfuscate at least $4 billion of illicit cryptocurrency profits since the start of 2020.reported.
Around a third of all stolen cryptocurrency, or approximately $1.2 billion, from surveyed incidents was traded using decentralized exchanges.
Delving into the details, the report noted that more than half of the illicit funds it identified were traded directly through two DEXs, Curve and Uniswap, with aggregator protocol 1inch coming in a close third.
A similar amount of about $1.2 billion has been laundered using currency exchange services that allow users to exchange assets within and across different networks without having an account.
“Many advertise on Russian cybercrime forums and almost exclusively target a criminal audience,” he noted..
Sanctioned entities increasingly use these technologies to move funds and carry out cyber attacksaccording to Elliptic:
“Wallets connected to groups eventually sanctioned by the United States – including those used by North Korea to carry out multi-million dollar cyberattacks – have laundered more than $1.8 billion through these techniques.”
In a June report on the risks of digital assets, the Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing, also identified cross-chain bridges and “chain jumping” as a high risk.
The Ren bridge was mentioned as a main option for cryptocurrency laundering; the vast majority of illicit assets, or more than $540 million, pass through it.
“Ren has become particularly popular with those looking to launder the proceeds of theft,” he said..
A potential solution to mitigate cryptocurrency theft was proposed by Stanford researchers last month.. This is an optional token standard called ERC-20R that offers the option to reverse a transaction within a certain period of time.
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