By Rafael Penning, undergraduate of the Course of International Relations of the Federal University of Pelotas (UFPEL). Member of LabGRIMA.
With technological advances, digitalization and the new cybernetic “territoriality”, the metaverse as well as the crypto-asset market develops through value productions through the conversion of hegemonically traded currencies, such as the US dollar, for applications or investments in virtual currencies in crypto wallets, among the most popular brokers such as Bitget, Bybit, Binance Exchange, Coinbase, Crypto.com, FTX, Kucoin Exchange and OKX.
While its investors, in addition to enjoying the absence of taxation from brokerages, mainly guaranteed by the headquarters of corporations that are established in tax havens, still have access to data encryption, so that transactions are carried out with security, brokers that generally develop their presence in the financial market, speculation and the metaverse.
CNBC (2022) reported the loss of about US$ 1.4 billion dollars resulting from violations and crimes perpetrated in intermediary chains called blockchain bridges where Axie Infinity players kept their amounts from Ronin crypto wallet, a bridge that intermediates in-game payments and maintains them under guardianship until players request a withdrawal or insert more money. It turns out that, according to the particularity and security brought, it still predisposes users to risks, especially when it comes to cybercrimes, where there is an incidence of scams and invasions with the aim of capturing assets and values.
Users who choose to intermediate their transactions through blockchain bridges end up putting themselves on display and being unprotected, as cryptography is guaranteed by digital wallets but not on these decentralized transaction platforms. When the user makes use of these bridges, which is normally a software that allows a person to send tokens from a blockchain network and receive them on another separate chain, also delimiting the concept of blockchain as accounting systems that support cryptocurrencies and are distributed, not centralized.
By exchanging a token from one chain to another, that is, when you exchange one cryptocurrency for another, an investor deposits the tokens in a code on the blockchain that allows the exchange without human intervention, this data is encrypted again and you receive a token it can trade in again, as long as the network is available to do so. Therefore, the amounts transferred and the amount of traffic on these bridges become a point of vulnerability and an opportunity for attack. In the previously presented case related to Ronin, the hackers were able to withdraw the amounts in transfer after going through five of the nine validators in the network to gain access to the cryptography blocked in the system.
The Federal Bureau Investigation recently issued a warning to consumers about apps that deceptively claim and present encryption but put users at risk. In October 2021, an estimated 244 victims lost about $42 million dollars in these transactions (CNBC, 2022). Services are commonly offered through contact with cryptocurrency investors and which present advantageous possibilities for the user and which are actually ways to predispose that investor to be a victim of cybercrimes, which are hardly likely in the encrypted context and not nationally regulated.
In summary, in order to have the capture and recovery of assets, there is a need to place the crypto-assets in a condition of exchange and exchange, actions regulated by the Department of Justice of the United States of America and the Federal Bureau Investigation are always carried out when cybercriminals try to access amounts earned by platforms that are directly or indirectly regulated by the US government, especially when there is a conversion from cryptocurrency to currency, as the US dollar prevails as a commercial currency.
FBI says fake crypto apps defrauded investors of more than $42 million. CNBC News, 2022. Available on: <https://www.cnbc.com/2022/07/19/fbi-says-fake-crypto-apps-defrauded-investors-of-more-than-42-million.html>.
HACKERS have stolen $1.4 billion this year using crypto bridges. Here’s why it’s happening. CNBC News, 2022. Available on: <https://www.cnbc.com/2022/08/10/hackers-have-stolen-1point4-billion-this-year-using-crypto-bridges.html>.
