Over the past year, cybercriminals have notably shifted away from using crypto mixers in favor of employing cross-chain bridges, as reported by blockchain forensics firm Elliptic. This transformation was particularly pronounced during June and July when the majority of stolen cryptocurrencies were laundered through cross-chain bridges. This represents a significant departure from the trends observed in the first half of 2022.
In a blog post dated September 18th, Elliptic attributed this shift in cybercrime tactics to a phenomenon known as “crime displacement.” Essentially, when law enforcement agencies intensify their efforts to combat criminal activities through a particular method, criminals tend to adapt by adopting new approaches. However, the switch to cross-chain bridges has been happening at a faster pace than initially anticipated by Elliptic. This acceleration is linked to the United States Office of Foreign Asset Control’s sanctions against Tornado Cash in August 2022.
The blockchain forensics firm also noted that various cybercriminal groups, including the North Korean-backed Lazarus Group, gravitated toward the Avalanche Bridge following the sanctions. The same bridge was reportedly used by the Lazarus Group in a recent incident involving the theft of funds from Stake totaling $41 million, according to blockchain security firm CertiK.
While there was a brief resurgence in the use of crypto mixers between November 2022 and January 2023, driven by the shutdown of RenBridge due to the collapse of its financier, Alameda Research, amidst FTX’s bankruptcy, criminals soon returned to relying on cross-chain bridges, and in greater numbers than before.
Elliptic’s analysis suggests that cybercriminals may favor cross-chain bridges because they pose a significant challenge for blockchain forensic firms when it comes to tracking illicit activities across various blockchain networks in a scalable manner.
“Criminals are aware that legacy blockchain analytics solutions do not have the means to trace illicit blockchain activity across blockchains or tokens in a programmatic or scalable manner.”
In addition, many of these stolen tokens are only exchangeable through cross-chain bridges, with most of these decentralized finance services not requiring identity verification, Elliptic explained.
The firm estimates that $4 billion in illicit or high-risk cryptocurrencies have been laundered through cross-chain bridges since 2020.
Image by Freepik
Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.