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Cross-chain bridges have been the subject of numerous attacks this year, but according to new information from blockchain analytics provider Elliptic, one of them was allegedly used to launder almost $500 million in illicit cryptocurrency assets.
The laundering of at least $540 million in criminal proceeds has reportedly been made possible by the crypto bridge RenBridge since 2020 through a practice known as chain hopping, which involves changing one cryptocurrency into another and transporting it across numerous blockchains.
Decentralized cross-chain bridges, according to Elliptic, offer "a free-floating alternative to exchanges for transferring currency between blockchains."
Hacker groups and rogue states
Cross-chain bridges, also known as blockchain bridges, allow users to move cryptocurrency easily between blockchain networks and are mostly utilized for legal purposes.
The bridge protocol, which is locked within a contract, is often used by users to deposit their tokens from one chain. After doing so, the user receives the equivalent of a parallel token in the other chain.
Elliptic pointed out that these bridges have also been utilized by hackers, ransomware gangs, and exploiters to launder criminal proceeds, with RenBridge being responsible for at least $540 million in such proceeds since 2020.
Most recently, the company claims that at least $2.4 million in crypto assets that were lost in the Nomad breach on August 2 passed over the cross-chain bridge.
Elliptic also pointed out that in the previous two years, assets from decentralized finance (DeFi) services worth at least $267.2 million have been cleaned up using RenBridge, and a portion of the $80 million allegedly stolen by North Korea from Liquid Global Exchange last year also went through RenBridge.
The Conti ransomware group, which is well-known for attacking the Costa Rican government in June, has also so far used RenBridge to launder more than $53 million.
Authorities inquisitive
Elliptic pointed out that the use of blockchain bridges like RenBridge makes it difficult for law enforcement to crack down on people and organizations that are abusing the new technology.
Since there is no central service provider that supports these cross-chain transactions, blockchain bridges like RenBridge provide a problem to regulators, the report stated.
The Financial Action Task Force (FATF) noted growing concerns related to "chain hopping," especially in the DeFi domain, in a status report published on June 30:
"The Defi sector's rapid expansion and evolution is cause for concern as it could lead to dangers accelerating and proliferating,"
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