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Specifically, this study applied FATF’s DeFi-relevant recommendations to identify who constitutes the VASPs in two cross-chain bridge protocols involved in the 2025 NEW YORK and LONDON, October 4th, 2025: Elliptic, the global leader in cryptoasset risk management, published research today revealing that criminals have used DeFi exchanges On August 8, the Office of Foreign Assets Control (OFAC) sanctioned virtual currency mixer, Tornado Cash, “which ha[d] been used to launder more than $7 billion worth of virtual currency

Increasing Crypto Crime: Cross-Chain DEXes Facilitate $4 Billion Money Laundering

The decentralized finance (DeFi) landscape, particularly cross-chain decentralized exchanges (DEXes), has become a significant avenue for money laundering, with estimates suggesting that criminals have laundered upwards of $4 billion through these platforms. This rise in crypto crime poses a serious threat to the overall integrity of the crypto ecosystem and necessitates enhanced regulatory scrutiny and risk management.

The Rise of Cross-Chain Laundering

Cross-chain DEXes, designed to facilitate the seamless transfer of assets between different blockchains, offer anonymity and ease of movement that attract illicit actors. The inherent complexity of tracing funds across multiple chains makes it difficult for law enforcement to track and recover stolen or illegally obtained cryptocurrency.

Elliptic, the global leader in cryptoasset risk management, published research today revealing that criminals have used DeFi exchanges, demonstrating the tangible impact of this issue. This highlights the urgent need for more sophisticated tools and strategies to combat money laundering in the DeFi space.

FATF Recommendations and DeFi VASPs

Specifically, this study applied FATF’s DeFi-relevant recommendations to identify who constitutes the VASPs in two cross-chain bridge protocols involved in the 2025 NEW YORK and LONDON, October 4th, 2025. Identifying and regulating Virtual Asset Service Providers (VASPs) within the cross-chain environment is crucial to mitigating the risk of illicit activity. Increased regulatory clarity and enforcement are essential to preventing criminals from exploiting these platforms.

OFAC Sanctions and the Battle Against Crypto Money Laundering

Government agencies are taking action to combat crypto-related money laundering. On August 8, the Office of Foreign Assets Control (OFAC) sanctioned virtual currency mixer, Tornado Cash, “which ha[d] been used to launder more than $7 billion worth of virtual currency". This action demonstrates the determination of authorities to disrupt criminal activity within the crypto sphere, even in decentralized environments. However, the ever-evolving nature of DeFi requires a proactive and adaptive approach to regulation and enforcement.

The Future of Crypto Regulation

Addressing the increasing crypto crime associated with cross-chain DEXes requires a multi-faceted approach. This includes:

  • Strengthening regulatory frameworks to address the specific challenges of DeFi.
  • Developing advanced tools for tracking and analyzing cross-chain transactions.
  • Enhancing collaboration between regulators, law enforcement, and the crypto industry.
  • Promoting greater transparency and accountability within the DeFi ecosystem.

By taking these steps, we can help to create a safer and more secure environment for legitimate crypto users and prevent criminals from exploiting the innovative potential of decentralized finance.

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