$7 Billion Laundered Through Cross-Chain Platforms

Cross-chain platforms are emerging as a significant venue for money laundering, with illicit activities totaling $7 billion - far exceeding forecasts.

Bitcoin now accounts for only a fraction of illicit activity on the blockchain

According to Elliptic, a company specializing in cryptocurrency risk management, decentralized exchanges and cross-chain bridges are increasingly becoming a hotbed for illicit financial activities, with money laundering totaling $7 billion.

The firm's report indicates that this method of laundering is rapidly gaining favor among cybercriminals. Elliptic had previously forecast that cross-chain laundering would reach $6.5 billion by the end of 2023 and soar to $10.5 billion by 2025. However, the current $7 billion figure suggests that the growth rate has outpaced their earlier estimates.

The method of laundering primarily involves transferring cryptocurrencies between various blockchains and tokens, a practice often termed as cross-chain criminal activity. It helps thieves and hackers obscure the origins of money obtained through scams and crypto thefts.

State of cross-chain crime by predicate offense and service used (Chart: Elliptic)
Prevalence of cross-chain crime by initial offense and service used (Chart: Elliptic)

The report points to two major trends contributing to the rise in this sort of criminal activity. First, there's a shift away from Bitcoin towards other cryptocurrencies that offer more anonymity and stability. Stablecoins like Tether (USDT) and USD Coin (USDC) are increasingly being favored for their easy availability and anonymity features. In fact, Bitcoin’s role in criminal blockchain activities has diminished substantially, making up only 19% of illicit transactions in 2022 compared to 97% in 2020.

Secondly, criminals are updating their strategies to evade law enforcement. As regulatory actions tighten around more traditional crypto crimes, a "crime displacement" effect is occurring, pushing criminals towards cross-chain activities as a new frontier for their illegal gains.

Remarkably, the first half of 2022 saw a 58% increase in thefts conducted via cross-chain bridges compared to the same period in the previous year, signaling a burgeoning trend in crypto crime.

At the time of publication, Bitcoin's price is $27,865.

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