The Rise of Illicit Funds Laundered Through Cross-Chain and Cross-Asset Services
In its annual report, analytics firm Elliptic predicted that funds laundered through decentralized exchanges (DEXs), cross-chain bridges, and non-KYC exchange services would reach $6.5 billion by the end of 2023. However, the latest report from Elliptic reveals that this estimate has already been surpassed. As of July this year, $7 billion of “illicit or high-risk funds” have been laundered using cross-chain and cross-asset services.
Elliptic attributes the increase in laundered funds to criminals employing more complex methods such as derivatives trading and limit orders to obfuscate their activities. Between July 2022 and July of this year, approximately $2.7 billion was laundered through coin swaps, bridges, and DEXs.
Lazarus Group: The Leading Culprit
The North Korean Lazarus Group has been identified by Elliptic as the primary source of illicit funds laundered through cross-chain bridges. The group is also the third largest source of cross-chain crime overall, having laundered over $900 million through these methods.
Elliptic is a London-based firm specializing in risk management for digital asset organizations, governments, and traditional financial institutions. Notably, it counts J.P. Morgan and Wells Fargo Strategic Capital among its investors.
Hot Take: Criminals Exploit Complex Methods to Evade Detection
The latest report from Elliptic highlights the alarming increase in illicit funds being laundered through cross-chain and cross-asset services. Criminals are becoming more sophisticated in their techniques, utilizing derivatives trading and limit orders to conceal their illegal activities. This poses a significant challenge for regulators and law enforcement agencies in combating money laundering in the crypto space. It is crucial for industry stakeholders to collaborate and implement robust measures to detect and prevent illicit transactions. The involvement of renowned institutions like J.P. Morgan and Wells Fargo Strategic Capital in Elliptic emphasizes the importance of addressing this issue to safeguard the integrity of the financial system.
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