The number screams off the page: $21.8 billion. That’s the current projected value of cross-chain crypto crime as of May 2025. Let that sink in. This isn’t hypothetical cash — it’s real dollars that feed the real-world issues. A great deal of it is really going straight to the pockets of the North Korean regime and others. Are we truly pouring money into the hands of our enemies with the same technology that we thought would set us free?

Unintended Consequences of Innovation

The boom of cross-chain technology was meant to be a hallmark of crypto innovation. Interoperability—the ability to move any asset from any blockchain to any other, instantly and securely—is the key to that potential. Here's the brutal truth: it has created a playground for criminals, a way to launder money with unprecedented speed and complexity. As Dr. Arda Akartuna from Elliptic said at RBPC this past weekend, criminals are taking advantage of the lack of clarity. They're becoming awfully good at it.

Consider this: 33% of these investigations involve more than three blockchains. Some span ten or more. Good luck tracking that, it’s the equivalent of chasing fog with a fishnet. This isn’t just a theoretical threat, North Korea is reportedly responsible for about 12% of that $21.8 billion. That’s cash underwriting their arsenal of weapons, their cyber warfare brigades, and someday their nuclear aspirations.

Current Regulation: Toothless Tiger?

Let’s face it, the old regulatory paradigm just isn’t working. Instead, we’re fixing one game and ignoring another—we’re playing whack-a-mole while the real problem continues to fester. Would the solution really be a blanket ban on crypto? Absolutely not. That would be to throw the baby out with the bathwater. It would kill innovation, push activity underground, and give even more power to criminals who lie outside the law.

The knee-jerk reaction is always to call for more regulation, but what we really need is smarter regulation. It’s time to put away the jackhammers and dismantle these higher walls. Instead, let’s think about producing more useful bridges that move us toward knowing who’s moving what, where, and why.

Target the Vulnerabilities Effectively

The answer is in focusing on the clear vulnerabilities of the cross-chain ecosystem. These are the pressure points, decentralized exchanges (DEXs) and swap services and cross-chain bridges. We need regulations that:

  • Require enhanced KYC/AML (Know Your Customer/Anti-Money Laundering) protocols for DEXs. If traditional exchanges have to play by the rules, so should DEXs.
  • Mandate transparency for cross-chain transactions. Every transaction should be traceable, regardless of which blockchain it originates from or ends up on.
  • Implement stricter oversight of swap services. These services are essentially money-laundering machines, and they need to be regulated accordingly.

The Bybit hack of $1.46 billion demonstrates most glaringly what occurs when these vulnerabilities are allowed to fester. North Korea was said to have employed dark web services to launder those stolen assets. That’s not just a security breach, that’s a national security threat.

This is interesting because of the link to online gambling. One fifth of all illegal activity funneled through coin swap services is associated with unlawful gambling websites. This isn’t just to prevent the next dark web casino from coming in under the radar, this is money laundering, terrorism financing, and a plethora of other illegal activities.

International Cooperation Is a Must

This isn’t a problem any one country can solve alone. We need international cooperation. We’re all going to need to share intelligence, coordinate regulatory efforts, and above all hold those bad actors accountable—no matter where in the world they’re located. Elliptic does work with law enforcement agencies like the U.S. Secret Service. Their successful takedown of exchanges like Garantex shows that progress is possible.

Review of Iranian services operating in violation of U.S. sanctions, associated with approximately $300 million in illicit crypto. These entities are actively undermining international security. We can't let them operate with impunity.

Second, reorient expectations to stop treating crypto like a futuristic toy. Now, it’s time to acknowledge the beast and understand that it’s an incredibly powerful tool, which can be wielded for both great good and great evil. Currently, it is being used to line the pockets of despots and fund narco-terrorism. We can't let that continue.

We need a balanced approach. We agree that we should protect innovation, but we should protect our national security. What we really need is smarter regulation—not stricter regulation. The future of crypto and maybe even the security of the world depends on it.