The flip side of DeFi bridges – Created at the end of 2019 on Ethereum, the DeFi ecosystem has since taken a multichain turn. Therefore, many bridge services have sprung up to allow funds to be transferred between blockchains. However, like any tool, these can be misused.
Half a billion dollars laundered via a DeFi bridge
On August 10, the company Elliptic Connect unveiled a report surprising regarding some uses of crypto bridges.
Indeed, the latter have focused on a relatively common phenomenon: the chain hopping, or string jump. This method is used in particular by most hackers who have attacked a crypto protocol.
So the chain hopping consists of send funds from blockchain to blockchain to cover their tracks. Obviously, said funds are, most of the time, from a hack, ransomware or scam. Unsurprisingly, the latter use bridge protocols to perform these transfers.
During its research, Elliptic Connect analyzed the activities of many bridges, including that of RenBridge. The results are not very good.
In total, these are more than 540 million dollars of illicit origin which have passed through the RenBridge bridge since 2020. These 540 million are composed of the funds of several hacks:
- $33.8 million from the Liquid exchange hack;
- $2.4 million from the Nomad hack;
- $153 million related to Russian ransomware;
- $53 million from the attack on the Costa Rican government;
- $92 million from Ryuk, the ransomware that has targeted hospitals around the world.
RenBridge has also been used by North Korean hackers to launder their thefts.
Either way, the biggest chunk of illicit funds flowing through the bridge comes from funds stolen from DeFi hacks.
Blaming the tool: a good method?
Obviously, RenBridge is not restricted to illegal uses. Since its inception, RenBridge has recorded a volume of over $12 billion. Consequently, illicit uses of the platform are limited to 4% of total usage.
A relatively low percentage, which opens the following question: is the tool to blame?
Indeed, this debate is all the more topical since the mixing service Tornado Cash entered the sights of the US Treasury.
Thus, many central authorities will tend to blame a tool for the uses that are made of it, although these uses may be anecdotal with regard to general use.
Moreover, this witch hunt seems to have no limits. Indeed, the Tornado Cash protocol, aware of the misuse that exists, had tried to put restrictions in place of uses. A procedure that will have been neither hot nor cold at the US Treasury.
At the same time, traditional currencies and the institutions that represent them are, once again, not worried about the uses that are made. Of course, criminals did not wait for the internet or cryptocurrencies to invent money laundering.
For its part, Tornado Cash is trying somehow to survive despite the multiplication of sanctions. Thereby, service providers Infura and Alchemy both began censoring transactions to the mixer.
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