The acceleration of cross-chain criminal activity is outpacing previous estimates, with $7 billion in suspicious or high-risk funds being laundered through cross-chain and cross-asset platforms, according to a new report called ‘The State of Cross-Chain Crime‘ issued by blockchain analysis firm, Elliptic.
On Thursday, the firm released a report offering insights into how criminals are using decentralized exchanges (DEXs), cross-chain bridges, and coin swap services by using proprietary data and real-world case studies.
A prior report released by Elliptic in October 2022 disclosed that decentralized exchanges, cross-chain bridges, and coin swap services had been used to launder $4.1 billion in illicit or high-risk funds up to July 2022. The company had then projected that this amount would climb to $6.5 billion by the close of 2023 and further surge to $10.5 billion by 2025.
New research methodologies, bolstered by Elliptic’s holistic blockchain analytics, have revealed the extensive scale of cross-chain criminal activity as both sanctioned entities and terrorist groups have diversified their digital assets to include over 80 different types of asset spread across more than 26 blockchains.
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The Lazarus Group has laundered over $900M
A prominent figure in this landscape is the Lazarus Group, which stands out as the leading entity laundering illicit funds via cross-chain bridges, with over $900 million laundered, making them the third largest contributor to cross-chain crime as a whole.
The Lazarus Group, sometimes referred to as the Guardians of Peace or Whois Team, is a cybercriminal collective believed to be operated in connection to the North Korean government. The exact number of its members remains elusive. Between 2010 and 2021, researchers have linked a series of cyberattacks to this group.
Cyber operations offer North Korea a strategic advantage, allowing them to pose an asymmetric threat with just a handful of operatives, particularly against South Korea.
On April 14, 2022, the US Treasury’s Office of Foreign Assets Control (OFAC) added the Lazarus Group to the Specially Designated Nationals (SDN) List, citing the North Korea Sanctions Regulations, section 510.214.
Additionally, the sophistication of these criminals is escalating. They’re now using intricate cross-chain strategies, including derivatives trading and limit orders, to further cloak their illicit laundering endeavours.
“Over the past decade, Elliptic has helped to mitigate risk and bring transparency to blockchains by identifying and tracking illicit activities within the crypto ecosystem,” said Dr. Tom Robinson, co-founder and chief scientist at Elliptic.
“Now, with the innovative insights from our Holistic blockchain analytics capabilities released last year, we’ve seen that cross-chain crime continues to grow, as bad actors continue to exploit services such as decentralized exchanges (DEXs), cross-chain bridges, and coin swap services.”
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