Elliptic: Over $4B Laundered Through DEXs, Swaps, And Bridges

Blockchain analytics and crypto compliance firm Elliptic has laid bare the extent to which decentralized exchanges and bridges are being used to launder funds. 

The new report published by the firm has stated that cyber criminals have laundered nearly $4 billion through the help of crypto tools such as DEXs, Bridges, and Coin swaps. 

A Damning Report 

The Elliptic report, titled “The State of Cross-Chain Crime Report 2022,” highlights the extent to which criminals have used services such as decentralized exchanges, cross-chain bridges, and non-KYC exchange services (coin swaps) to move around nearly $4 billion in funds, associated with illegal and illicit activities. Researchers from Elliptic said they took a deep dive into the “new frontier of crypto laundering.” 

The report stated that the flow of capital between crypto assets is more unhindered than ever due to new technologies such as bridges and decentralized exchanges. Some of the most prolific users include dark web markets, hackers, Ponzi schemes, ransomware providers, and more. 

Earlier Findings 

In similar research published earlier, Elliptic had identified RenBridge, a cross-chain bridge, as a possible vector that criminals have used to launder over $540 million worth of crypto assets. The findings point to the increasing use of cross-asset and cross-chain transactions by criminals in an effort to evade the tracing of their illegal activities. The Financial Action Task Force has called this phenomenon “chain hopping” in its June 2022 report on virtual assets. 

Main findings Of The Report 

In the report, Elliptic has broken down its findings for each tool. The report states that DEXs have facilitated the movement of $1.2 billion in ill-gotten assets. These decentralized exchanges are protocols that allow users to buy or sell assets through smart contracts. It also added that the use of these DEXs is closely interlinked with DeFi exploits and the hacking of prominent centralized exchanges.

The report put cross-chain bridges as another popular tool used by criminals. In the report, Elliptic stated that criminals had transferred over $750 million of illicit funds through chain bridges since 2020. Cross-chain bridges allow users to transfer assets between different blockchain networks. According to the report, a majority of the $750 million worth of illicit assets transferred have been done through RenBridge. RenBridge is a popular cross-chain bridge between Bitcoin and Ethereum. 

The report stated that blockchain-based tools such as DEXs and bridges are used for money laundering because they can obfuscate transaction trails, making investigations more difficult. 

The third tool featured in the report are coin swaps. Coin swaps allow users to swap assets across or within a blockchain without having to open an account. Elliptic stated that coin swaps are popular on Russian cybercrime forums and cater almost exclusively to a criminal clientele. 

Legitimate Use Cases 

Elliptic clarified that while the tools mentioned have legitimate use cases, they are also being used to process funds linked with illegal activities. A spokesperson for Elliptic stated, 

“To be clear, Elliptic is not saying DEXs or bridges are used exclusively by criminals. In fact, the opposite is true. They are mostly used by legitimate users. But Elliptic has traced illicit funds (from hacks etc.) that have been moved through DEXs and bridges in order to obfuscate their origin.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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