$4 Billion Laundered by Criminals through DEXs, Elliptic Report Shows

Blockchain analytics and security firm Elliptic has shown that criminals operating in the crypto ecosystem explore decentralized solutions in more ways than is known. 


Through its latest report titled “The state of cross-chain crime report 2022,” the analytics firm confirmed that criminals have laundered the total sum of $4 billion through Decentralized Exchanges (DEXs), bridges, and protocols offering Coin Swaps.

According to Elliptic, the use of these protocols is hinged on the fact that these platforms do not have a strict Know-Your-Customer (KYC) procedure, making conducting transactions, irrespective of their illegitimate status more accessible. By virtue of their design, the decentralized protocols are notably linked with scams, Ponzi Schemes, dark web activities, and ransomware amongst others.

“To be clear, Elliptic is not saying DEXs or bridges are used exclusively by criminals; In fact, the opposite is true. They are mostly used by legitimate users. But Elliptic has traced illicit funds (from hacks etc.) that have been moved through DEXs and bridges in order to obfuscate their origin,” a spokesperson for Elliptic said in a statement.

For the better part of this year, there has been quite a lot of emphasis on the roles being played by cryptocurrency mixing services like Blender.io and Tornado Cash in money laundering activities. Both have been sanctioned by the United States Treasury Department’s Office of Foreign Assets Control (OFAC) on the grounds that they are connected to the North Korean Lazarus Group hacking syndicate.

With this revelation from Elliptic, the clamour for intense scrutiny of decentralized protocols is bound to grow in the coming days. DeFi regulation is top of the agenda for most regulators as the industry offers products that compete with the traditional financial ecosystem.

Without the extant regulations guiding events in the space, regulators believe the implosion experienced in space with the collapse of Three Arrows Capital (3AC), Voyager Digital, and the Celsius Network, amongst others, would have been avoided.

Image source: Shutterstock


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