Cybercriminals are turning to cross-chain bridges to move illicit funds, according to market intelligence platform Chainalysis.
Cross-chain bridges allow users to transfer crypto assets from one blockchain to another.
In a new report, Chainalysis says the amount of crypto bridge protocols receive from illegal addresses has increased from just $312.2 million in 2022 to $743.8 million in 2023, representing a 138% year-over-year increase.
“Illegal actors’ use of bridge protocols for money laundering has increased significantly in 2023, especially among crypto thieves.”
Chainalysis says money laundering tactics are changing, citing the fact that while much of crypto money laundering activity still involves sending the stolen assets to exchanges, the most sophisticated criminals now use other use platforms such as bridges and mixers.
The report says the North Korea-sponsored cybercriminal gang known as the Lazarus Group is among the bad actors using bridges to move illicit funds.
“Cryptocriminals with more advanced money laundering skills – such as the infamous North Korean cybercriminals associated with hacking gangs such as Lazarus Group – tend to use a wider variety of crypto services and protocols.
North Korea-linked hackers are among those most likely to use bridges for money laundering.”
In 2022, Lazarus Group stole $100 million worth of cryptocurrency from Horizon, the cross-chain bridge of Ethereum rival Harmony (ONE). Chainalysis describes how the gang laundered the money.
“Funds linked to the 2022 Harmony hack moved to a popular bridge protocol in May 2023, where they were moved from the Bitcoin blockchain to the Avalanche blockchain. The funds were then exchanged for a stablecoin and then bridged again using a different protocol, this time from the Avalanche blockchain to the TRON blockchain.”
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