Cross-Chain Crime Hits $7B: North Korean Ties Unveiled

Elliptic, a reputable blockchain analytics entity, shed light on the expanding realm of cross-chain crime. Their 2023 report, ‘The State of Cross-chain Crime,’ delineated that an alarming $7 billion of illicit or high-risk funds have been navigated through cross-chain and cross-asset services. The report further unmasked the Lazarus Group, tied to North Korean hackers, as a notable perpetrator, orchestrating $900 million of the cross-chain crime. The findings underscore an escalating issue, exceeding prior anticipations and posing a grave concern for the blockchain domain.

Reflecting on the trajectory, Elliptic’s initial report released in October 2022 illustrated that $4.1 billion of illicit funds were laundered through decentralized exchanges, cross-chain bridges, and coin swap services up until July 2022. The analytics firm had then forecasted this figure to ascend to $6.5 billion by the end of 2023, and further to $10.5 billion by 2025. Contrary to these projections, recent data reveals an accelerated pace, with $2.7 billion being laundered between July 2022 and July 2023, signaling a surpassing of earlier estimations.

Utilizing cutting-edge research methodologies, and Holistic blockchain analytics, Elliptic has managed to unmask the true scope of cross-chain crime. The analysis divulged that sanctioned and terrorist entities are now in possession of over 80 different assets distributed across more than 26 blockchains. The report also hinted at an enhanced sophistication in laundering techniques with criminals adopting complex cross-chain methods like derivatives trading and limit orders to veil their activities.

Lazarus Group: Emerging as a Significant Cross-Chain Criminal

The Lazarus Group has been pinpointed as a major culprit, standing as the largest source of illicit funds funneled through cross-chain bridges and ranking third in overall cross-chain crime. Their actions echo a rising menace within the crypto arena, accentuating the pressing necessity for fortified security frameworks and adept blockchain analytics to counter cross-chain crime.

Dr. Tom Robinson, Co-founder and Chief Scientist at Elliptic, expressed the firm’s enduring dedication towards diminishing risks and augmenting transparency within blockchain networks by detecting and tracing illicit activities within the crypto sphere. As cross-chain crime trends upward, the imperative for innovative insights via advanced blockchain analytics is underscored to shield the industry from malicious adversaries.

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South Korean prosecutors trace millions in illicit funds tied to Terra co-founder

South Korean prosecutors are actively tracing illicit funds linked to Terraform Labs co-founder Do Kwon and his associates. A recent investigation identified 414.5 billion won ($314.2 million) in illegal assets, with approximately 91.4 billion won ($69 million) of that amount directly linked to Kwon. Despite the large sum of money tied to Kwon, the South Korean authorities are unable to recover any of the assets due to Kwon’s reported conversion of the funds into Bitcoin using overseas exchanges.

According to a report published by KBS, a local media outlet, Kwon converted most of the illicit funds into Bitcoin instead of investing in physical assets. This has made it difficult for the South Korean authorities to recover the assets since they are not under their jurisdiction. The investigation into Terra’s collapse by the United States Securities and Exchange Commission (SEC) revealed that Kwon siphoned nearly $100 million worth of Bitcoin from Terra after the collapse.

Further reports based on an SEC interview with former Terraform Labs revealed that Kwon was accused of siphoning $80 million a month before the collapse of the Terra ecosystem. This has led South Korean prosecutors to actively trace properties associated with Terraform Labs executives to recover some of the illicit funds from the Terra debacle.

In their pursuit of justice, South Korean prosecutors have seized homes and other assets to stop former Terra employees from selling assets that might be tied to legal cases. Among the assets seized are residences in Seoul owned by former CEO Shin Hyun-seong and others. The prosecutors also filed foreclosure actions against foreign-registered vehicles, lands in Hwaseong and Gapyeong in Gyeonggi-do, and Taean in South Chungcheong Province.

Terra was a booming crypto ecosystem until its $40 billion collapse in May 2022 due to fraud, with Kwon at the epicenter. Initially thought to be a market-triggered event, the investigation revealed that Terraform Labs had dumped over $450 million of UST on the open market in the three weeks leading up to the depeg of the TerraUSD (UST) stablecoin. Four days after the last sale, UST started collapsing. Despite an arrest warrant from South Korean authorities and an Interpol red notice against his name, Kwon evaded arrest for nearly a year before being caught on March 23 in Montenegro.

In conclusion, the South Korean authorities are actively pursuing justice in the Terra debacle by tracing illicit funds and recovering assets tied to Terraform Labs executives. The investigation revealed the scale of the fraud committed by Do Kwon and Terraform Labs, leading to the collapse of the crypto ecosystem. Although most of the illicit funds have been converted into Bitcoin, the authorities remain vigilant in their efforts to recover the assets and bring those responsible to justice.


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