Hackers Are Upgrading Their Laundering Techniques
On-chain data shows that crypto hackers are increasingly using cross-chain protocols like THORChain to move stolen assets from Ethereum to Bitcoin.
In one case, the KelpDAO-related attacker converted 75,700 ETH into BTC in a single day. Another Balancer exploit attacker has also been actively converting ETH into BTC.
Why Is Cross-Chain Becoming a Laundering Path?
Traditional laundering relies on mixers or address fragmentation on a single chain. Cross-chain protocols introduce a new layer of complexity by enabling direct asset movement between blockchains.
Key characteristics include:
- Rapid asset conversion across chains
- Reduced traceability in intermediate steps
- Increased complexity in transaction graphs
This significantly challenges existing compliance systems.
Why THORChain Is Being Used
THORChain is a decentralized liquidity protocol that enables cross-chain swaps without custodial intermediaries. While this improves capital efficiency, it also creates opportunities for misuse.
In multiple cases, attackers have used THORChain to quickly convert ETH into BTC to reduce traceability.
Hackers Are Optimizing Asset Structures
Rather than simply moving funds, attackers are increasingly optimizing asset composition:
- ETH → BTC to reduce smart contract traceability
- Fragmented holdings → consolidated liquid assets
- On-chain exposure → harder-to-freeze asset forms
This reflects a more sophisticated financial strategy behind crypto crime.
How KYT Addresses Cross-Chain Risks
In a cross-chain environment, traditional single-chain monitoring is insufficient. Critical risks often emerge at chain transition points.
Trustformer KYT enables:
- Cross-chain fund path reconstruction
- Multi-chain address correlation
- High-risk flow tracking
- Cluster-based hacker fund identification
This restores visibility across fragmented blockchain ecosystems.
DeFi Infrastructure Enters a Risk Reassessment Phase
Protocols like THORChain improve liquidity but also introduce regulatory challenges. When assets move freely across chains, traditional AML models lose effectiveness.
As a result, DeFi infrastructure may face increasing scrutiny, particularly around cross-chain liquidity and compliance visibility.