Clustering across services and chains

Graduate · enrolled learners

This lesson opens with Lazarus cross-chain laundering, 2022 onward.

What happened

North Korea-linked groups, Lazarus Group foremost, stole about 1 billion dollars from DeFi protocols in 2022 alone by Chainalysis's estimate that September, including more than 600 million dollars from the Ronin bridge in March 2022, and they launder across chains on purpose. Chainalysis describes the usual route in five stages: stolen ether to intermediary wallets, mixed in batches through Tornado Cash, swapped for bitcoin, the bitcoin mixed in batches, then deposited to services that cash out to fiat. The Ronin funds passed through more than 12,000 addresses, and the US Treasury said Tornado Cash laundered over 455 million dollars of them. After Treasury sanctioned Tornado Cash in August 2022, Lazarus moved to chain hopping over bridges, for example bridging ETH to the BNB chain, swapping it for USDD and bridging that onward. A mixer takes funds in at one address and pays out from a different pool, so common-input-ownership and change detection, which work within one chain's address graph, do not carry across the gap. Chainalysis followed the funds anyway, with tracing it calls advanced, to the cash-out points, and with law enforcement and exchanges freezing funds, more than 30 million dollars, about 10 percent of the theft, was seized. The trail was carried through the mixer not by a shared key but by evidence that what came out corresponded to what went in.

The decision point

Address-level clustering has a hard edge: it lives inside one chain's transaction graph, and a service, a mixer, an exchange, a bridge, is a wall the graph does not cross. Funds go in as inputs to the service and come out as unrelated outputs from the service's own pool, so the co-spending and change signals that clustered an entity stop at the door. Following an entity across that wall is a different move: not proving one owner signed, but showing that the funds out correspond to the funds in, by amount, by timing, by sequence, by any pattern the launderer could not fully scramble. This is clustering across services and chains, and it is both weaker and unavoidable, because every serious launderer routes through exactly these walls. The analyst who stops at the mixer has followed the money to the edge of one graph; the analyst who can argue a correspondence across it keeps the trail alive.

Recorded loss

$600,000,000

Orientation and Year One are open: anyone can read them without an account. From Year Two onward the lessons are for enrolled learners, because progress through the later years only means anything if it is tracked against a record.

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