As cryptocurrencies continue to enter mainstream adoption, criminals continue to exploit the asset class and seek new ways to launder their ill-gotten proceeds.
A new report from blockchain analytics firm Elliptic revealed that criminals have laundered $7 billion in cryptocurrencies through cross-chain services. The latest figure represents a significant increase from the $4.1 billion reportedly laundered through cross-chain crime a year ago.
The report also stated that approximately $2.7 billion was laundered through cross-chain crime between July 2022 and July 2023.
Criminals Target Cross-Chain Services
Cross-chain crime is a money laundering method involving swapping crypto assets between blockchains to obscure their criminal origin.
According to Elliptic, this method is on track to become the dominant means of laundering crypto assets.
“Our latest figures suggest that it is fast becoming the preferred money laundering method for a range of cybercrimes, including scams and crypto thefts, as enforcement actions continue to target criminals’ traditional means of obfuscating funds.”
According to the report, criminals employ cross-chain services, including decentralized exchanges (DEXs), cross-chain bridges, and coin swaps to launder stolen funds.
The report found that the majority of cross-chain crime is being perpetrated by North Korea’s Lazarus Group, which is responsible for laundering over $900 million in crypto through this method. This figure represents 1/7th of all cross-chain crime that is being tracked, according to Elliptic.
Cross-Chain Crime on the Rise
Elliptic highlighted several reasons why cross-chain crime has been prevalent among criminals. The analytics platform cited the “crime displacement effect,” which involves increased crime in another area due to enforcement actions to reduce crime in one area.
According to Elliptic, this suggests that as law enforcement crackdown on traditional forms of crypto crime, such as money laundering through mixers, criminals are turning to new methods, such as cross-chain crime.
“Fraudsters are also exploiting the fact that many cross-asset and cross-chain services – excluding centralized exchanges – do not require ID verification to be used,” Elliptic added.
