Criminals more reliant on cross-chain bridges than ever after mixer crackdowns

Cybercriminals have accelerated their shift away from crypto mixers for cross-chain bridges over the previous yr, based on blockchain forensics agency Elliptic.

In June and July, practically the entire crypto stolen was laundered by cross-chain bridges, Elliptic’s information exhibits an entire reversal from the primary half of 2022.

In a Sept. 18 weblog publish, Elliptic defined the cross-chain crime development is because of the “crime displacement” impact — the place criminals transfer to a brand new methodology to hold out the illicit exercise when the prevailing methodology will get over-policed. Nonetheless, the shift to cross-chain bridges is rising forward of their projections. 

Between July and September 2022, the ratio of laundered funds passing by mixers vs. cross-chain bridges flipped, comparable to the U.S. Workplace of Overseas Asset Management’s sanctioning of Twister Money in August 2022, mentioned the agency.

Elliptic mentioned many cybercriminals, just like the North Korean-backed Lazarus Group, flocked to the Avalanche bridge after the sanctions.

This identical bridge was reportedly used just lately by the Lazarus Group to facilitate a number of the stolen funds in Stake’s $41 million exploit on Sept. 4, based on blockchain safety agency CertiK.

Crypto mixers noticed a small comeback between November 2022 and January 2023, because of the shutdown of RenBridge — which closed in December after its financer, Alameda Analysis collapsed from FTX’s chapter.

Elliptic estimates that RenBridge facilitated $500 million in laundered funds all through its operation.

Nonetheless, shortly after, criminals have moved again to cross-chain bridges once more, much more than earlier than.

Chain-hopping by way of bridges has grow to be one of the well-liked cash laundering strategies for illicit actors. That is been an issue for crypto investigators — till now. Meet TRM Phoenix — automated cross-chain tracing by 12+ bridges & providers: https://t.co/OziATjlO4P pic.twitter.com/7QsLthn180

— TRM Labs (@trmlabs) August 25, 2022

Associated: Three steps crypto buyers can take to keep away from hacks by the Lazarus Group

Elliptic mentioned that criminals could also be preferring cross-chain bridges as it’s troublesome for blockchain forensic corporations to trace illicit exercise throughout chains in a scalable method.

“Criminals are conscious that legacy blockchain analytics options wouldn’t have the means to hint illicit blockchain exercise throughout blockchains or tokens in a programmatic or scalable method.”

As well as, many of those stolen tokens are solely exchangeable by cross-chain bridges, whereas most of those DeFi providers don’t require id verification to make use of, Elliptic defined.

The agency estimates that $Four billion in illicit or high-risk cryptocurrencies have been laundered by cross-chain bridges since 2020.

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