Blockchain forensics firm Elliptic noted that 1inch has become popular with criminals due to its design as an aggregator.
Decentralized exchange (DEX) aggregator 1inch is now the “most commonly used service for laundering funds” from illegal activities in the world, as decentralized finance (Defi) applications have become a hotspot for criminal activity.
A now-deleted blog post (still available in Google web cache) states that more than $322 million in illicit funds have flowed through 1inch’s contracts since 2019.
Researchers at the blockchain company attribute this inflow of funds to the protocol’s design, saying that 1inch was originally designed as an aggregator to interact with the liquidity pools of other DEXs and optimize cross-asset swaps.
Elliptic noted that 1inch’s recent updates also help cybercriminals hide their tracks, saying that criminals can now exchange their illicit funds instantly and at scale using limit orders, a feature introduced by 1inch in 2021 team was introduced.
However, 1inch is not the only DEX used by malicious actors. Other decentralized applications are also being used by terrorist organizations to move funds, analysts say.
For example, Elliptic claims that wallets linked to the Palestinian Islamic Jihad organization, a Sunni Islamist militant group, use TRON-based protocols such as SunSwap to transfer the necessary funds into TRX, TRON’s native cryptocurrency procure. At press time, neither 1inch nor SunSwap made any public statements.
Meanwhile, US-based blockchain analytics firm Chainalysis says there are “overstated metrics and flawed analysis” regarding the use of crypto by terrorist groups.
While some organizations such as Hamas, Hezbollah and Palestinian Islamic Jihad use cryptocurrencies for financial activities, the company argued that it is still a small part of their overall financing strategy.
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