New research from blockchain analytics and crypto compliance firm Elliptic has revealed the extent to which cross-chain bridges and decentralized exchanges (DEXs) have removed barriers for cybercriminals.
In an October 4 report titled “The State of Cross-Channel Crime,” Elliptic Eray researchers Arda Akartuna and Thibaud Madelin took a deep dive into what they described as “the new frontier in money laundering.” crypto”. The report summarizes 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 are using cross-chain bridges, DEXs and coin exchanges to hide at least $4 billion in illicit crypto products since the start of 2020, he reported.
About a third of all stolen crypto, or around $1.2 billion, from the incidents studied was traded using decentralized exchanges.
Digging 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 the 1-inch aggregation protocol coming in third.
A similar amount (about $1.2 billion) was laundered using coin exchange services that allow users to trade assets within and between different networks without having an account.
“Many are advertised on Russian cybercrime forums and are aimed almost exclusively at a criminal audience,” he noted.
According to Elliptic, sanctioned entities are increasingly turning to these technologies to move funds and carry out cyberattacks.
“Wallets linked to groups eventually sanctioned by the United States – including those used by North Korea to carry out multimillion-dollar cyberattacks – have laundered more than $1.8 billion through these techniques.”
In a June report on virtual asset risks, global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF) also identified cross-chain bridges and the “ chain hopping” as a high risk.
Related: $2 billion worth of crypto stolen from cross-chain bridges this year: Chainalysis
The Ren Bridge has been mentioned as a top choice for crypto laundering with the vast majority of illicit assets, over $540 million, flowing through it.
“Ren has become particularly popular with those seeking to launder the proceeds of theft,” he said.
A potential solution to mitigate crypto theft was proposed by Stanford researchers last month. It is an opt-in token standard called ERC-20R that provides the ability to rollback a transaction within a set time frame.