Elliptic Records A Rise In Cross-Chain Crimes
Analytics company Elliptic has reviewed and described the trend of cross-chain crimes seen in the cryptocurrency space in recent times.
A report from Elliptic suggests that cross-chain crime has become a new form of money laundering that has seen rapid growth recently. Criminals are increasingly choosing cross-chain networks to hide their identities to launder cryptocurrency funds. According to the report, $4 billion dollars in cryptocurrency was laundered last year. However, there has been an increase of this type of crime since 2021, when the DeFi space was gaining momentum.
Reference was also made to a phenomenon called "crime displacement". The idea is that if law enforcement takes tools away from criminals, they will use others. This is what happened to the Lazarus Group, a hacker group that laundered stolen funds through the crypto mixer Tornado Cash. The group started using Avalanche Bridge when Tornado Cash was sanctioned.
Elliptic has identified why criminals are increasingly using cross-chain bridges. One of the main ones is the lack of identity verification. Criminals are more likely to generate their income in unknown tokens, the transfer of which is possible in cross-chain.
Elliptic concludes that cross-chain criminality is a relatively new phenomenon, but it calls into question the stability of blockchain technology. As a result, it can only strengthen regulatory oversight.