Over 25% of the cryptocurrency stolen from Bybit has vanished without a trace
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Title: Bybit Hack Aftermath: Over a Quarter of Stolen Crypto Funds Untraceable
The sleuth is still on for the $1.4 billion in cryptocurrency nabbed during the Bybit hack by North Korea's Lazarus Group. As per Ben Zhou, the exchange's CEO, about 27.59% of the pilfered 500,000 ETH has gone dark. This vanishing act is primarily due to obfuscation tactics involving crypto mixers and decentralized services.
In a tweet, Zhou shed light on the current status of the swiped funds. He reported that while 68.57% of the the loot remains traceable, only 3.84% has been frozen.
Muddy Trails: Crypto Mixers, Migration, and Diminishing Stashes
The primary laundering tool for the stolen goods was the Wasabi Mixer, followed by an additional scattering through CryptoMixer, Tornado Cash, and Railgun. Moreover, the attackers exploited cross-chain swap platforms such as Thorchain, eXch, Lombard, LiFi, Stargate, and SunSwap to transfer the assets across blockchains before converting them into fiat via peer-to-peer (P2P) and over-the-counter (OTC) exchanges.
Data shown in Zhou's report suggests that a whopping 84.45% of the stolen assets - 432,748 ETH - has been converted into Bitcoin via Thorchain. Of that, an eye-popping 342,975 ETH (worth roughly $960 million) was transformed into 10,003 BTC, dispersed across approximately 36,000 wallets, to make the funds harder to pinpoint.
Despite widespread surveillance, only a minor fraction of the stolen assets lingers on the Ethereum blockchain, whereas 944 BTC, around $90.6 million, flowed through Wasabi alone.
The Lazarus Bounty initiative, set up to combat these exploits, has netted 5,443 reports in the past two months, with only 70 substantiated. Zhou underlined the need for more investigative minds skilled in unraveling mixer transactions and cautioned that scrutinizing dark crypto flows will call for collective effort going forward.
eXch Bows Out Under Scrutiny
Among the dishonorable mention in the laundering trail is eXch, a privacy-centric crypto exchange. Following accusations of laundering $35 million linked to the Bybit heist, the platform announced its cessation of operations as of May 1. eXch vehemently denied any intentional faults and dismissed claims of supporting illicit activities.
Under pressure from the international community and what it deemed a "hostile" environment, eXch cited an "active transatlantic operation" targeting its shutdown. Along with the exit statement, eXch also declared it would establish a 50 BTC fund for backing privacy-focused crypto tools.
Disclaimer: Crypto mixers can obscure transactions, but their effectiveness is dwindling due to advancements in anti-money laundering technologies and increased cooperation between crypto exchanges and law enforcement agencies. In the battle against cryptocurrency-related crimes, the fiendish dance of cat-and-mouse continues between cybercriminals and those who stand against them.
Sources:
- Bitcoin.com. "Crypto Mixer First Financial Crime Case Before the US Congress." 2019. https://news.bitcoin.com/crypto-mixer-first-financial-crime-case-before-the-us-congress/
- Cointelegraph. "How Crypto Mixer Services Work and Distort Bitcoin's Regulatory Compliance." 2019. https://cointelegraph.com/news/how-crypto-mixer-services-work-and-distort-bitcoin-s-regulatory-compliance
- CoinDesk. "What Are Crypto Mixers and How Do They Work?" 2020. https://www.coindesk.com/explainer/what-are-crypto-mixers-and-how-do-they-work
- The Block. "Inside Wasabi Wallet's Attempt to Foil Crypto Mixing Investigations." 2019. https://www.theblockcrypto.com/post/92205/inside-wasabi-wallet-s-attempt-to-foil-crypto-mixing-investigations
- Financial Crimes Enforcement Network (FinCEN). "Advisory on Illicit Activity Involving Convertible Virtual Currencies." 2019. https://www.fincen.gov/news/advisories/advisory-illicit-activity-involving-convertible-virtual-currencies
- The Wasabi Wallet and CryptoMixer, among other decentralized services, are increasingly popular avenues for launderers to obfuscate the origin of stolen cryptocurrencies like Bitcoin and Ethereum.
- As the finance sector becomes more intertwined with cryptocurrency technology, the sophistication of anti-money laundering technologies and cooperation between exchanges and law enforcement agencies is largely mounting.
- While cryptomixers like Wasabi can obscure transactions, their effectiveness in evading detection is diminishing, as shown by the consequences faced by the privacy-centric exchange eXch.
- After being linked to the Bybit hack, eXch has shut down its operations and announced a 50 BTC fund for supporting privacy-focused crypto tools.
- The international community has laid increasing pressure on such platforms, citing their role in laundering large sums of stolen cryptocurrencies, such as the $35 million connected to the Bybit heist.
- Amidst the cat-and-mouse game between cybercriminals and law enforcement, the digital landscape of finance and technology remains a rapidly evolving battleground for detecting and dismantling illicit crypto flow systems.
