Decentralised exchanges are a major source for fraud.
Image source: Simona Maini Chief Executive Officer/Elliptic.
Cryptoasset risk firm Elliptic published research revealing that crime across DeFi exchanges, cross-chain bridges and ‘coin swap’ services have amounted to $4bn in illicit proceeds.
According to Elliptic’s newly issued The State of Cross-chain Crime report, $1.2bn has been stolen from DeFi and centralised exchanges, accounting for a third of all crypto heists this year.
Cross-chains, superhighways that connect different blockchains, are responsible for more than $1.8bn in laundered funds, with North Korean cyber criminals Lazarus Group using cross-chains to conduct illicit activities.
Two months ago, Elliptic noted that $540m had been stolen from the RenBridge, a cross-chain bridge connecting the Ren protocol to the Ethereum network among others.
Previous research from Elliptic indicates that cross-chain bridge hacks accounted for 30 per cent of the largest crypto-heists to date. In August, the Nomad cross-chain hack wiped $200m from the platform and the Wormholebridge in February led to $320m being lost.
The largest hack to date is Axie Infinity’s Ronin bridge hack, with $622m lost in March 2022.
A further $1.2bn has been tracked to ‘coin swap’ services, which allow users to exchange assets across blockchains without opening an account. Elliptic’s research suggests that the Russian cyber gang Wizard Spier has been active in coin swap thefts.
Elliptic states that there is a “cross-chain problem” as well as concerns about decentralised exchanges and other DeFi offerings.
Last Tuesday, at a conference held at the Bank of France, Ravi Menon, managing director of the Monetary Authority of Singapore, questioned DeFi and crypto products.
He said he does not see “any redeeming value” for crypto and Defi, due to the risks and prevalence of fraudulent activities in the space.