Decentralization is a unique feature for cryptocurrency that removes the interference of third parties in crypto-asset transactions. While it could be an advantage in most cases for investors and other participants, it could limit fraud detection.
In the cryptocurrency industry, there have been lots of incidents of hacks, scams, frauds, and other dubious activities. With the increase in the acceptance and adoption of digital assets, more criminals are also entering the space. Moreover, the increase in technological advancement has also greatly assisted criminals.
According to the recent report released by Elliptic, crypto bridges have aided the majority of the money laundering within the crypto industry. The blockchain analytics firm pointed out RenBridge, a bridge network, as the most used by criminals since 2020.
Elliptic stated that RenBridge had aided the transfer of about $540 million to hackers, fraudsters, and other money laundering activities. It cited RenBridge as an example of DeFi cross-chain platforms with high risks.
In Elliptic’s explanation, though some of the cross-chain bridges, like RenBridge, are legitimate, they have become critical players in money laundering.
They created platforms where criminal-minded customers can avoid regulations and transfer funds conveniently across different networks. The report acknowledged that also cross-chain thefts and ransomware operations could flow through the crypto bridges.
Cryptocurrency market surges on the daily chart | Source: Crypto Total Market Cap on TradingView.comRenBridge is a digital bridge developed to ensure fast and easy conversion of virtual currencies. For example, users can convert Bitcoin and ZCash to Ethereum and any other networks they want.
Cryptocurrency Transactions Could be TracedLots of people believe that it’s impossible to trace digital transactions. But they are not entirely untraceable. In some cases, it’s possible to conceal the sources of funds by using decentralized special services like RenBridge.
Additionally, the Elliptic report implied that the stolen funds from the Japanese Liquid crypto network were laundered using RenBridge. This crime is linked to North Korean hackers.
Also, Elliptic noted that RenBridge is famous among several ransomware operations in Russia. It quoted that about $153 million from ransomware has been laundered through the bridge platform.
Such operations have gotten to the notice of the regulators. The US Department of the Treasury sanctioned Tornado Cash at the beginning of the week.
The firm is a DeFi mixer developed to conceal the sources of digital assets in transactions. The Department took similar action in May against the mixer Blender.io. The government authorities noted that notorious hacker groups in North Korea used these two firms.
Numerous digital services could aid criminal and non-criminal activities, such as censorship evasion and privacy. However, DeFi is predominantly packed with thefts and hacking. Hence, there’s every need to identify the possible lapses to assist government regulations and security analysts.
Featured image from Pixabay, chart from TradingView.com
