- About $4.1 billion had been laundered in October 2022 through cross-chains and decentralized systems.
- By July 2023, the amount of crypto assets laundered was up to $7 billion.
While the popularity of crypto has increased because of its decentralized nature, it has also led to its exploitation, resulting in illicit deals and trades. Regrettably, the decentralized nature makes it challenging to address security vulnerabilities, resulting in numerous undetected fund-related issues. Not to mention, governments are yet to establish proper regulations over the crypto community.
Cross-chain crimes, especially, have become increasingly popular. According to BanklessTimes.com, about $10.5 billion of illicit crypto will be laundered through cross bridges by 2025.
The site's crypto analyst, Alice Leetham, comments:
Cross-chain transfers offer ease of convenience and interoperability between blockchain networks, making it a prime target for criminals. With nearly 7 billion laundered so far, we can expect the predicted 2025 figures to rise higher.BanklessTimes crypto analyst, Alice Leetham
Illicit Crypto Commerce over Cross-chains
Cross-chain crime poses unique challenges for law enforcement and regulatory authorities. This is especially true for the fight against hacking organizations, for instance, the notorious Lazarus Group — a North Korean cyberhacking organization.
This organization was solely responsible for laundering over $900 million, making it the largest provider of illicit funds through cross bridges. Further statistics show that about $441 million of crypto funds had been stolen, $198 million laundered through Tornado Cash, and $153 million through ransomware in cross-chain transactions.
The Ren bridge, which swapped between Bitcoin and Ethereum, was the most affected by these scams and attacks in 2022. About $500 million of crypto assets were lost to criminals. The Avalanche bridge was also involved in illicit activity. At its inception, it started with about 58000 BTC, and nearly 20000 of that was from illegal sources, mainly from the Lazarus Group.
As of July 2022, cross-chain crime has witnessed substantial increases, with crypto thefts rising by 103.4%, scams and Ponzi schemes surging by 243.3%, and the activities of the Lazarus Group experiencing a notable uptick of 167.6%.
Why is Cross-chain Crime Increasing?
The crypto industry’s growth stems from the existence of different types of crypto assets. However, most of these assets have become particularly appealing and potential criminal targets. Good examples are privacy coins like Monero and Dash, which offer enhanced privacy and anonymity features. These features are naturally exploited by criminals, making it difficult to trace transactions or identify the involved parties, leading to the rise in illicit crypto crime.
Moreover, most blockchain networks have yet to properly scrutinize illicit activity, providing avenues for criminals to go in with their activities unnoticed, especially through coin swapping or chain hopping.
Cross-chain transactions are a drawing magnet for criminals looking to hide their identities and keep their activities undetected. In the future, more regulatory oversight must be enforced to reduce illicit crypto commerce over Blockchain networks.
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