To what extent cross-chain bridges and decentralized exchanges (DEXs) have lowered hurdles for cybercriminals is revealed in new study from blockchain analytics and crypto compliance business Elliptic.
Elliptic researchers Eray Arda Akartuna and Thibaud Madelin delved into what they called "the next frontier of crypto laundering" in a report titled "The situation of cross-chain crime" on October 4. The analysis concluded that the introduction of bridges and DEXs has greatly facilitated the transfer of value across different crypto assets.
At least $4 billion in illicit crypto profits have been concealed by cybercriminals utilizing cross-chain bridges, DEXs, and coin swaps since the start of 2020, the report claimed.
Decentralized exchanges were used to trade almost $1.2 billion worth of stolen bitcoin throughout the instances studied.
Further analysis revealed that Curve and Uniswap were the primary destinations for the majority of the illegal cash traced by the investigation, with 1inch aggregator protocol coming in a close third.
Coin swap services, which enable users to trade assets within and across different networks without an account, have also been used to launder a similar sum (about $1.2 billion).
Many, it was pointed out, advertise themselves on Russian cybercrime forums and target an audience consisting nearly entirely of criminals.
According to Elliptic, sanctioned organizations are increasingly using these tools to launder money and launch cyberattacks.
More than $1.8 billion was laundered using similar approaches by wallets tied to organisations later sanctioned by the United States, including those used by North Korea to commit multi-million dollar cyberattacks.
The Financial Action Task Force (FATF), an international group tasked with preventing the misuse of funds for terrorism and other criminal activities, identified cross-chain bridges and "chain hopping" as two of the most pressing threats to virtual assets in a study published in June.
Many millions of dollars' worth of illegal funds, according to reports, have been laundered over the Ren bridge.
Those "looking to launder the proceeds of theft" have "found Ren to be particularly attractive," the report noted.
Last month, researchers at Stanford offered one approach to reducing crypto theft. ERC-20R is an optional token standard that allows users to undo a transaction within a specified time frame.
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