According to blockchain analysis group Elliptic, hackers, fraudsters and others have laundered at least $540 million through the cryptocurrency bridge network Rainbridge since 2020. The Elliptical researchers published the report today, citing Rainbridge as an example of the risks of a decentralized cross-chain network.
Rainbridge has been introduced as a way to easily convert virtual currencies such as ZCash and Bitcoin to the Ethereum network and then to other blockchains. But “as well as a legitimate tool, cross-chain bridges have also emerged as a major facilitator of money laundering,” allowing users to evade regulations and transfer money easily over the network, the report said. Is. This includes ransomware operations and stolen proceeds from other chains.
Cryptocurrencies are not as untraceable as some users expected, but it is still possible to mask sources of funds with specific services, especially decentralized ones such as Elliptic. And regulators are starting to take notice. Earlier this week, the US Treasury Department approved Tornado Cash, a decentralized mixer designed to obscure the sources of crypto. It did a similar trick with the mixer Blender.io in May. In both of those cases, the government took note of the alleged use of the services by North Korean hacker groups.
Elliptic’s report similarly suggests that Rainbridge was used to launder money stolen from Japan’s LiquidCrypto network, a hack linked to North Korea. It also claims that Rainbridge is popular among ransomware operations linked to Russia, adding that $153 million in ransomware was laundered through the service.
Many other digital services can be used for both criminal and non-criminal purposes, such as evasion of privacy and censorship. But decentralized finance, or DeFi, is particularly rife with theft and hacking, and the identification of chokepoints is potentially useful for security analysts and governments.