Blockchain Bridges Gain Popularity for Money Laundering as Crypto Mixers Decline

According to CoinDesk, last year saw an increase in the use of blockchain bridges and a drop in the use of crypto mixers for money laundering. This change demonstrates how sophisticated illicit actors can adapt their money laundering strategies. Chainalysis reported in its annual report on crypto money laundering that illicit crypto activity dropped significantly last year, partly due to lower crypto trading volume and partly because sophisticated threat actors like the Lazarus Group are developing methods to evade detection. The report revealed that $22.2 billion was laundered via crypto in 2023, down from $31.5 billion the year before. In 2023, there was an increase in the use of blockchain bridges and gambling services for laundering crypto, while in 2022, there was greater reliance on illicit service types and centralized exchanges. The report also noted that the share of illicit funds going to decentralized finance (DeFi) protocols has grown, with the growth primarily being attributed to the total value locked (TVL) of DeFi rising in the period. The Lazarus Group, a North Korea-based threat actor, has been adapting its money laundering strategies to avoid detection, utilizing a variety of protocols, including mixers like YoMix and cross-chain bridges, to obfuscate the origin of stolen funds. While bridges are gaining in popularity because of Lazarus Group's preference, the value of funds sent to mixers from illicit addresses almost halved to $504.3 million. Chainalysis noted that much of this is likely due to law enforcement and regulatory efforts, such as the sanctioning and shutdown of mixer Sinbad in November 2023. The U.S. Treasury sanctioned the crypto mixer Sinbad for alleged ties to North Korea's hacking group, leading to the seizure of its website by the FBI, Dutch and Finnish authorities. Chainalysis concluded that the changes in money laundering strategy from crypto criminals like Lazarus Group serve as an important reminder that the most sophisticated illicit actors are always adapting their money laundering strategy and exploiting new kinds of crypto service.