Crypto is gradually becoming legalized in many countries, but its use in money laundering continues to persist. The recent Bybit hack has brought to light an unprecedented money laundering operation, raising questions about the rise of such illicit activities in the crypto space.

Ben Zhou, the CEO of Bybit, stated that a significant portion of the stolen funds from the February hack remain traceable, while some have gone dark and the rest have been frozen. Zhou identified the use of crypto mixers such as Wasabi, TornadoCash, Railgun, and Crypto Mixer in the money laundering process. He called on bounty hunters to help decode mixer transactions in an effort to recover the stolen funds.

The Bybit hack has been linked to the Lazarus Group, a hacker organization allegedly sponsored by North Korea. Elliptic, a blockchain data analysis company, called it the biggest heist in history. The funds stolen by the Lazarus Group have reportedly provided Pyongyang with the necessary funds for its nuclear program.

The Europol report highlights that money laundering is the main criminal use for cryptocurrencies. The volume of money laundered through crypto has nearly doubled in recent years, reaching billions of dollars annually. Despite a drop in overall crypto transactions volume, the laundered crypto volume has remained relatively stable.

Chainalysis, a blockchain analysis firm, notes that criminal activities in the crypto space have become more diverse and professionalized in recent years. The use of mixers and cross-chain bridges by crypto criminals has increased, although law enforcement efforts have led to a decline in mixer use after a peak in the past.

As the crypto industry continues to evolve, regulators and law enforcement agencies will need to stay vigilant to combat money laundering and other illicit activities in the space. The Bybit hack serves as a reminder of the challenges and risks associated with the growing adoption of cryptocurrencies.