Crypto money laundering has reached a record high with approximately $7 billion washed clean via decentralized exchanges (DEXs), cross-chain bridges, and coin swap services, according to the latest "State of Cross-chain Crime" report from Elliptic, a blockchain analytics and crypto compliance company.
Cross-chain crime involves the exchange of cryptocurrency between different tokens or blockchain networks to obscure the illicit source of the funds. Such transactions, called "chain-hopping" or "asset-hopping," are usually performed rapidly and without any reasonable business justification.
Elliptic's figures suggest that cross-chain crime has become the preferred means to launder money for cryptocurrency scammers and thieves, allowing them to evade authorities focused on combating traditional methods of concealing illicit funds.
The value provided in the report has grown significantly compared to the $4.1 billion figure from the last year's report. Back then, experts projected that the total of money laundered through cross-chain services would reach $6.5 billion by the end of 2023 and $10.5 billion by 2025. However, the latest calculations point to much higher dynamics, with as much as $2.7 billion laundered through cross-chain methods in just 12 months between July 2022 and July 2023.
Several factors contribute to this uptick. The number one reason is that criminals have been increasingly leveraging altcoins, especially privacy coins like Monero, which provide much more anonymity than pseudonymous Bitcoin, and stablecoins, including Tether or DAI, that offer stable value due to their dollar peg.
Another factor is law enforcement's focus on traditional crypto criminal activities, resulting in "crime displacement" and crooks turning to cross-chain techniques as a more effective and safer alternative. The lack of ID verification requirements for many cross-asset and cross-chain services, excluding centralized exchanges, also facilitates fraudulent activity.
Below, you can check the cross-chain money laundering data broken down by type of crime, value, and method.
The biggest surge in cross-chain crime can be observed in crypto thefts, scams, Ponzi schemes, and money laundering by the North Korean Lazarus Group, responsible for approximately one-seventh of all cross-chain crime tracked by Elliptic, with over $900 million laundered through covered methods.
