At least $4 billion (roughly Rs. 32,600 crore) of illicit crypto assets have been laundered through various “cross-chain” technologies, which allow legitimate and illegitimate users to move funds between blockchain networks, claims the analytics firm Elliptic in a new report. Decentralized exchanges (DEXs), cross-chain bridges, and coin exchange services are used for money laundering due to their additional levels of anonymity. Notable recent exploits include the Axie Infinity Ronin sidechain hack, which saw over $500 million (about Rs 4,100 crore) stolen, and the $100 million Horizon Bridge attack (about Rs 800 crores of rupees).
The company clarified that while these tools generally have legitimate use cases, they are also increasingly being used to process funds related to activities such as theft, dark web services, mixing, scams and Ponzi schemes, ransomware and others.
⚠️🚀Launch – our State of Cross-Chain Crime Report which explores illicit cross-chain activity to the tune of over $4 billion and shows how the next generation of blockchain analytics can provide deeper insight overall crypto risk.https://t.co/kJI3EsKtol#cybercriminality
— elliptical (@elliptical) October 4, 2022
In its report titled “State of Cross-Chain Crime,” Elliptic researchers broke down their findings for each of these blockchain tools, starting with decentralized exchanges or DEXs. Since 2020, DEXs have facilitated the movement of $1.2 billion (around Rs 9,800 crore) in ill-gotten assets, Elliptic said. DEXs are protocols that allow users to execute buy and sell orders using smart contracts. The use of DEXs by criminals is closely associated with exploits in the decentralized finance (DeFi) space and hacks of centralized exchanges, the firm reported.
Cross chain bridges are the second type of tool found by Elliptic to be popular among criminals. Here, Elliptic researchers reported that since 2020, criminals have funneled nearly $750 million (about Rs 6,100 crore) of illicit funds through cross-chain bridges, an activity called “chain hopping” by Elliptic. These bridges allow users to transfer assets between blockchain networks.
The third tool detailed in the report is “coin exchanges” or non-KYC cryptocurrency exchange services. These allow users to trade assets within and between blockchains without opening an account. According to Elliptic, coin swaps are mostly advertised on Russian cybercrime forums and are aimed almost exclusively at a criminal audience. These account for $1.2 billion (roughly Rs. Rs. 9,769 crore) of illicit transactions since 2020.
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