Blockchain analytics firm Elliptic can now track crypto movements across and between all blockchains concurrently, and in a matter of milliseconds, the company said on Wednesday.
Elliptic’s new analytics offering, called Holistic Screening, can be a game changer for companies looking to ensure compliance with regulators, according to a press release shared with CoinDesk. Holistic Screening will also speed up the tracking of stolen funds across multiple blockchains, which are usually processed through cross-chain bridges, the statement added.
“The way in which crypto is used has shifted. Individual crypto assets and blockchains are no longer isolated systems, and have become part of a larger, interconnected crypto-economy,” Tom Robinson, co-founder and chief scientist at Elliptic said.
Decentralized cross-chain bridges, which serve as unregulated alternatives to crypto exchanges for transferring funds between blockchains, are hotbeds for illicit activity. Blockchain sleuth Chainalysis estimates around $2 billion has been stolen via cross-chain bridges this year.
According to Elliptic’s own research, one such bridge called RenBridge has facilitated the laundering of at least $540 million worth of illicit funds, with around a third of those funds believed to have been stolen by North Korean hackers.
Regulators are not sitting idly and are also doubling down on these systems. On Monday, the U.S. Treasury Department sanctioned crypto mixer Tornado Cash, a tool that can obscure the source of funds, which was used to launder tens of millions of dollars worth of crypto stolen from the cross-chain bridge Ronin earlier this year.
Many analytics firms do provide cross-chain analytics services, but Robinson says Elliptic’s solution is automated and scalable, which can beat time-consuming manual investigations.
“This is in contrast to current “cross-chain” solutions from the likes of Chainalsysis, which are focused on enabling lengthy law enforcement investigations, and cannot be used by an exchange for large-scale anti-money laundering or sanctions compliance,” Robinson told CoinDesk in an e-mailed statement.
Elliptic had to build an “entirely new blockchain analytics engine,” called Nexus, over three years to make Holistic Screening possible, Robinson added.
Nexus enables Elliptic to trace the source or destination of funds through one asset within the same blockchain; through different assets within the same blockchain, as well as trace funds between assets across multiple blockchains.
“Fund flows are traced even when they “hop” between chains – for example through cross-chain bridges. This tracing goes through thousands of hops if necessary,” Robinson said.