Elliptic: criminals laundered $540 million through RenBridge cross-chain bridge

What’s new? Elliptic analysts reported that criminals have laundered about $540 million in cryptocurrency through the cross-chain bridge, RenBridge, since its inception in 2020. Of that, 153 million was stolen by Russian hacker groups, including Conti, the group behind the Ryuk ransomware. Hackers from the DPRK also accounted for a significant portion of the laundered digital assets.

Elliptic’s report

Report details. Another $267 million laundered with the cross-chain bridge was stolen from cryptocurrency exchanges and decentralized finance (DeFi) protocols. $33,8 million of that was withdrawn from Japan’s Liquid exchange. In total, the platform lost $97 million as a result of the August 2021 hack.

Also through RenBridge passed part of the funds ($2,4 million) received by hackers as a result of the exploit of Nomad, a cross-chain protocol, on August 2. Back then, the total value locked (TVL) in the protocol fell from $190 million to $10 000.

Elliptic’s vice president of policy and regulatory affairs David Carlisle said that cross-chain bridges are “a bit of a blessing and a curse” at this point. In his view, they are especially important for the development of the DeFi space, which is a crypto alternative to the banking system. However, at the same time, they are ungoverned, vulnerable to attacks, and use for money laundering.

In the report, analysts point out that bridges allow crypto assets to be transferred between blockchains without using centralized services such as exchanges, most of which require mandatory passing know your customer (KYC) procedure.

“Cross-chain bridges are a loophole in the regulatory regime that has been painstakingly established by governments around the world, to combat crypto laundering,” explained Tom Robinson, Elliptic’s chief scientist.

According to analysts at Chainalysis, the damage from cross-chain protocol hacks amounted to $2 billion in 2022. They noted that bridges attract hackers because they often have a central storage point for funds locked as collateral. Experts called the vulnerability of bridges the main threat to the security and trust of users in blockchain technology.