The laundering of “ill-gotten” cryptocurrency exerts a multifaceted impact on global financial and security landscapes, “presenting challenges for businesses, governments, and individuals alike,” according to an update from CertiK.
CertiK notes in a blog post that for businesses, particularly those operating within the fintech and blockchain sectors, crypto laundering “undermines the perception of integrity in their industry, eroding public trust in these emerging and promising technologies.”
CertiK also mentioned that governments face the dual challenge of adapting regulatory frameworks “to effectively combat these sophisticated laundering techniques, while ensuring innovation in the digital finance sector is not stifled.”
CertiK’s report pointed out that at “an individual level, the repercussions of crypto laundering extend beyond the direct financial losses incurred from these activities.”
It also contributes to “a broader atmosphere of insecurity and mistrust in digital financial systems, potentially impeding the wider adoption and development of legitimate cryptocurrency applications.”
As explained by CertiK, understanding and addressing crypto laundering is “not only a matter of financial security but also pivotal in shaping the trajectory of digital finance and maintaining public confidence in these systems.”
CertiK further revealed in their extensive reprt that in 2023, a “discernible shift” in crypto laundering methods has emerged. Their analysis reveals “a marked increase in the bridging of stolen funds to the Bitcoin blockchain.”
Across the 50 largest exploits of 2023, one-third of stolen proceeds “ended up being bridged to or laundered on the Bitcoin network.” The report also noted that this is particularly notable as “the vast majority of Web3 security incidents do not take place on Bitcoin.”
As stated in the update, this trend indicates “a departure from the previously predominant use of platforms like Tornado Cash, which, despite its continued use, has seen a decline following heightened regulatory scrutiny.”
The report added that Bitcoin mixers, such as the recently dismantled Sinbad mixer, have “become the laundering tools of choice for sophisticated cybercriminal groups like Lazarus Group.”
This shift was evident when CertiK scrutinized the top 50 most significant security incidents of 2023, “analyzing the methods employed by attackers in the aftermath of their heists.”
According to the CertiK report, this trend “not only sheds light on the evolving nature of crypto laundering tactics but also signals an urgent need for equally dynamic countermeasures in the ongoing battle against blockchain-based financial crime.”
The report from CertiK noted:
“While Tornado Cash remains a primary tool for obfuscating funds from smaller-scale cybercrimes, a shift is evident in larger-scale incidents involving assets exceeding $50 million. This transformation is primarily driven by the strategic preferences of the most formidable threat actors in the digital realm. Notably, the North Korean Lazarus Group, with their well-established laundering operations utilizing Bitcoin mixers, has set a precedent in the crypto underworld.”
The report continued:’
“Lazarus’s methodical transfer of vast sums into Bitcoin mixers underscores a deep-seated familiarity with and confidence in this laundering avenue. Similarly, Russian-linked cybercriminal factions have echoed this approach, further cementing Bitcoin mixers’ status as one of the go-to tool for laundering in high-stakes crypto thefts, regardless of whether they initially take place on the Bitcoin blockchain.”
The report concluded:
“This strategic pivot towards Bitcoin-based laundering solutions is not merely a trend but a harbinger of the challenges that lie ahead in combating crypto laundering. Understanding and countering this shift is not just crucial for mitigating financial losses, it’s also pivotal in safeguarding the integrity and future of the Web3 world.”