tokenist.com
Cross-chain bridge service called RenBridge has been used to launder about $540 million in illicit crypto money in the past two years, according to the latest data by the blockchain analytics firm Elliptic. The research report underlines the increasing illegal use of cross-chain bridges, which are essentially used for an exchange of information, cryptocurrency, or non-fungible tokens (NFTs) from one blockchain network to another.
Cross-chain Bridges Are “a Bit of a Blessing and a Curse”
A new survey by the blockchain analytics provider Elliptic showed that cross-chain bridge service known as RenBridge has been used to launder at least $540 million in dirty crypto money since 2020. RenBridge is an open protocol bridge that serves as a way to cross-chain assets between multiple blockchains.
According to Elliptic, $153 million of the total $540 million represent ransomware payments. This means that criminals are using RenBridge when they break into companies’ systems, forcing them to pay millions of dollars to retrieve their data. Elliptic added that RenBridge was also widely used among Russia-linked ransomware criminals.
Cross-chain bridges are generally used to exchange information or assets across the blockchain. These bridges are able to bypass a centralized service that can trace and freeze transactions, making it a popular choice among hackers.
David Carlisle, vice president of policy and regulatory affairs at Elliptic, described cross-chain bridges as both “a blessing and a curse.” These services essentially serve as another way for people to pay and make transactions and have played an important role in the development of the decentralized finance (DeFi) space.
Join our Telegram group and never miss a breaking digital asset story.
First Mixers Now Bridges
Carlisle believes the financial regulators are likely to crack down on cross-chain bridges in the following six to twelve months as the number of crypto-related hacks and frauds surges. Recent research showed that the number of attacks on DeFi Protocols surged by a whopping 1330% in 2021. Earlier this year, more than $600 million was stolen in an exploit of the Ronin network.
Similarly, the U.S. Treasury Department placed the crypto mixing solution Tornado Cash on a backlist on Monday, alleging the service was used in money laundering of over $7 billion worth of crypto since 2019. The move suggests that the U.S. regulators are serious about cracking down on crypto crime, Carlisle added.
By blacklisting Tornado, the U.S. regulators have banned all U.S. individuals and organizations from using Tornado Cash or any other Ethereum wallet addresses linked to the service. Those who do not comply with the ban could face financial fines from $50,000 to $10,000,000 and 10 to 30 years imprisonment.
However, in contrast to Tornado Cash, RenBridge is an open protocol meaning it does not have a CEO. This raises a question regarding the government’s ability to regulate such services that are not managed by central figures.
Do you think financial watchdogs will find a way to properly regulate cross-chain bridges? Let us know in the comments below.