A recent report by blockchain surveillance firm Elliptic has revealed that a staggering $7 billion in “illicit or high-risk funds” has been laundered through decentralized exchanges (DEXs), cross-chain bridges, and non-KYC exchanges. This amount was reached by July of this year, surpassing Elliptic’s previous prediction that these activities would amount to $6.5 billion by the end of 2023.
The report highlights the increasing complexity of illicit activities in the crypto space, with criminals adopting more sophisticated methods for making cross-chain transfers. These methods include derivatives trading and limit orders on exchanges, which are used to obscure money laundering operations. Over the course of one year, from July 2022 to July 2023, approximately $2.7 billion was laundered using these methods, according to the report.
Notably, the report identifies North Korea’s Lazarus Group as a major contributor to these illicit activities. The Lazarus Group is the top source of illicit funds laundered through cross-chain bridges and ranks third in overall cross-chain crime. It has managed to launder over $900 million through cross-chain methods alone.
The report also highlights the growing popularity of digital assets other than Bitcoin among cybercriminals. Some digital assets, like Monero (XMR), are preferred by criminals due to their strong privacy features, while stablecoins like DAI are popular because they maintain a stable value against fiat currencies.
Elliptic notes that cross-chain activities are becoming more popular because most cross-chain services, such as bridges, do not have know-your-customer (KYC) requirements, unlike centralized exchanges. This lack of KYC requirements makes it difficult to trace the activities of bad actors who engage in asset or chain-hopping to evade detection.