Criminals more reliant on cross-chain bridges than ever after mixer crackdowns
Cybercriminals have accelerated their shift far from crypto mixers for cross-chain bridges over the previous year, according to blockchain forensics firm Elliptic.In June and July, almost all of the crypto taken was washed through cross-chain bridges, Elliptics information reveals a complete reversal from the first half of 2022 In a Sept. 18 blog post, Elliptic explained the cross-chain criminal offense pattern is because of the “criminal offense displacement” result– where lawbreakers transfer to a new method to carry out the illicit activity when the existing technique gets over-policed. However, the shift to cross-chain bridges is rising ahead of their projections. Proportion of funds laundered between cryptocurrency mixers and cross-chain bridges between January 2022 and July 2023. Source: Elliptic.Between July and September 2022, the ratio of washed funds going through mixers vs. cross-chain bridges turned, corresponding to the U.S. Office of Foreign Asset Controls sanctioning of Tornado Cash in August 2022, stated the company. Elliptic said lots of cybercriminals, like the North Korean-backed Lazarus Group, gathered to the Avalanche bridge after the sanctions.This same bridge was reportedly used just recently by the Lazarus Group to facilitate a few of the taken funds in Stakes $41 million exploit on Sept. 4, according to blockchain security company CertiK.Crypto mixers saw a small return between November 2022 and January 2023, due to the shutdown of RenBridge– which closed in December after its financer, Alameda Research collapsed from FTXs bankruptcy.Elliptic quotes that RenBridge assisted in $500 million in laundered funds throughout its operation.However, quickly after, criminals have moved back to cross-chain bridges again, even more than before.Chain-hopping via bridges has turned into one of the most popular money laundering methods for illegal actors. Thats been a problem for crypto private investigators– previously. Meet TRM Phoenix– automatic cross-chain tracing through 12+ bridges & & services: https://t.co/OziATjlO4P pic.twitter.com/7QsLthn180— TRM Labs (@trmlabs) August 25, 2022.
Related: 3 steps crypto investors can take to avoid hacks by the Lazarus Group Elliptic stated that crooks may be choosing cross-chain bridges as it is difficult for blockchain forensic companies to track illicit activity across chains in a scalable manner.” In addition, many of these taken tokens are just exchangeable through cross-chain bridges, while many of these DeFi services do not require identity confirmation to utilize, Elliptic explained.The firm approximates that $4 billion in high-risk or illegal cryptocurrencies have actually been washed through cross-chain bridges since 2020.