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- 1 Nearly $4 Billion has been laundered through decentralized exchanges (DEXs).
- 2 With over 22K crypto assets in the market, only a handful of them are operating legitimately.
Gary Gensler, the Securities and Exchange Commission (SEC) chair, once called the crypto sector “rife with fraud and hucksters”. After a new study on crypto sector fraud, the statement might make sense. Elliptic, a blockchain analytics company, reports that $7 Billion worth of cryptocurrencies were laundered via cross-chain services. Cross-chain crime involves the transfer of funds in rapid succession to obscure transactions.
Cross-Chain Services Becomes Preferred Mean of Exploits
The report highlights that cross-chain bridges are becoming the preferred money laundering method for a variety of cybercrimes. Elliptic attributes findings from their report namely “State of Cross-chain Crime”. The initial report found nearly $4 Billion has been laundered through decentralized exchanges (DEXs). The figure has almost doubled now.
Moreover, the company speculated that $6.5 Billion would be laundered by this time. However, the cybercriminals surpassed their expectations. In addition to that, the blockchain data analyst foresees the number exceeding $10 Billion by 2025. Duration between July 2022 and July 2023 saw almost $3 Billion laundered through cross-chain crimes.
The rising popularity of altcoins among criminals is giving tailwinds to such crimes. Furthermore, the report underscores a ‘criminal displacement’ effect arising out of a surge in law enforcement activities in the sector. Triviality in identity verification and scarce capabilities to be overwatched by mainstream blockchain analytics add to the exploitation of cross-chain services.
The chart above displays the coin swap services that have the largest piece of the pie in the dark web, illicit virtual asset services, and gambling. On the contrary, cross-chain exploits fall under the area of expertise within Korea-based Lazarus Group, and ransomware and malware services. Thefts from DEXs too have increased significantly.
Leveraging Crypto Illiteracy
Elderly citizens are coming under the crosshairs of cybercriminals. Their non-tech-savvy nature makes them an easier target on the radar. American business news provider reported of Marjorie Bloom, a retired civil servant, losing all her life savings to a crypto fraud.
The United States citizens have lost over $700 Million to investment crimes followed by falsely personified tech support. A similar case was reported by the British news provider The Guardian in June 2023. Social media played an important part in this. Additionally, it left her saddled with a bundle of debts.
With over 22K crypto assets in the market, only a handful of them are operating legitimately. Decentralized nature is both a boon and a bane to them. On one hand, it eliminates middlemen from the game, while on the other, blind faith in projects may leave investors stranded in the desert.
On top of that, artificial intelligence (AI) has made deploying website codes no less than child’s play. Anyone can create a project backed by bogus coins or tokens to exploit potential investors. Cryptocurrencies have grown significantly between 2013 and 2023. However, AI integration in the sector could manifold the figures.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
