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Cross-chain bridge RenBridge laundered $540M in hacking proceeds: Elliptic

August 11, 2022 Coin Telegraph

Cross-chain bridge RenBridge laundered 0M in hacking proceeds: Elliptic

blockchain bridges

The blockchain forensics firm said cross-chain bridges provide an "unregulated alternative" to exchanges for transferring value between blockchains.

Cross-chain bridges have been the target of more than a few hacks this year, but new data from blockchain analytics provider Elliptic alleges one has been used to launder over half a billion dollars in ill-gotten crypto assets.

According to an Aug. 10 report, crypto bridge RenBridge has facilitated the laundering of at least $540 million in proceeds of crime since 2020 through a process known as chain hopping — converting one form of cryptocurrency into another and moving it across multiple blockchains.

Elliptic said that decentralized cross-chain bridges provide “an unregulated alternative to exchanges for transferring value between blockchains.”

Rogue states and hacker groups

For the most part, cross-chain bridges or blockchain bridges are used for legitimate purposes, enabling users to move cryptocurrencies seamlessly across blockchain networks.

Users typically deposit their tokens from one chain to the bridge protocol, which is locked into a contract, then the user is issued the equivalent of a parallel token in another chain.

However, Elliptic noted these bridges have also been used by ransomware gangs, exploiters, and hackers to launder proceeds of crime, with RenBridge accounting for at least $540 million of laundered proceeds since 2020.

Most recently, at least $2.4 million in crypto assets stolen during the Nomad hack on Aug 2 went through the cross-chain bridge, according to the firm.

Elliptic also noted that assets from decentralized finance (DeFi) services worth at least $267.2 million have been laundered using RenBridge in the last two years, while a portion of the $80 million stolen from Liquid Global exchange last year, allegedly by North Korea, has passed through RenBridge.

The Conti ransomware group, which famously attacked the Costa Rican government back in June, has also laundered over $53 million through RenBridge so far.

Authorities concerned

Elliptic noted that blockchain bridges such as RenBridge poses a challenge to authorities trying to clamp down on individuals and groups using the emerging technology for illicit activities.

"Blockchain bridges such as RenBridge pose a challenge to regulators since there is no central service provider that facilitates these cross-chain transactions," it said.

In a Jun. 30 status report from the Financial Action Task Force (FATF), the intergovernmental organization highlighted increasing risks associated with "chain hopping," particularly in the DeFi space:

“The rapid growth and evolution of the Defi sector is a cause for concern as it could cause risks to accelerate and proliferate.”

$2B in crypto stolen from cross-chain bridges this year: Chainalysis

August 4, 2022 Coin Telegraph

Chainanalysis

The $190 million Nomad Bridge exploit is just the latest out of 13 separate bridge attacks in 2022 so far.

Cross-chain bridge hacks have accounted for 69% of the total crypto stolen in 2022, amounting to $2 billion in losses, according to a new report.

The report comes from blockchain analytics firm Chainalysis on Aug. 2, noting there have been 13 separate token bridge hacks this year — the most recent being the $190 million Nomad Bridge exploit.

Q1 2022 was by far the quarter that saw the most amount of crypto stolen since 2021, due mainly to the Ronin Bridge Attack in late March, which saw $624 million in Ether (ETH) and Circle USD (USDC) stolen.

Following last night's exploit of the Nomad Bridge, an estimated $2B has been stolen from cross-chain bridges so far in 2022. Read our blog to learn what makes these protocols vulnerable and what the industry can do about it. https://t.co/WLo62H6NFe pic.twitter.com/CZRnqrPikh
— Chainalysis (@chainalysis) August 2, 2022

Cross-chain bridges, also known as blockchain bridges are designed to transfer cryptocurrencies from one blockchain network to another.

Chainalysis explains that while bridge designs vary, users typically deposit their tokens from one chain to the bridge protocol which are then locked into a contract. The user is then issued the equivalent of a parallel token in another chain.

Bridge vulnerabilities

According to the Chainalysis report, bridges are often targets because they “feature a central storage point of funds that back the 'bridged' assets on the receiving blockchain.”

"Regardless of how those funds are stored – locked up in a smart contract or with a centralized custodian – that storage point becomes a target."

According to some experts, effective bridge design is still in its nascent stages of development, and some developers still have relatively little understanding of security protocols, making their protocols vulnerable to exploitation by hackers.

In a July 22 clip posted on Twitter, almost two weeks before the recent attack, Nomad founder James Prestwich says it will be "at least another year or two before there is enough familiarity across chain security models to build defenses as a standard."

"In cross-chain systems, we haven't built up that kind of expertise about attacks yet, people don't know what the common attacks are, and so they don't defend against them."

Centralized exchanges were once the favorite target of hackers, but advances in security protocols have seen a drop in successful cyber attacks, according to Chainalysis.

The blockchain analytics firm has stressed that cryptocurrency services, including bridges, should start investing in security upgrades and training sooner rather than later.

“A valuable first step towards addressing issues like this could be for extremely rigorous code audits to become the gold standard of DeFi, both for those building protocols and for the investors evaluating them. Over time, the strongest, safest smart contracts can serve as templates for developers to build from.”

Cross-chain Bridges