- The crypto industry is facing a crime supercycle aided by politicians.
- DeFi protocols are benefiting from the surge in crypto hacks and scams.
- Existing laws are outdated and side with smart contract exploiters.
Blockchain investigator ZachXBT has has issued a scathing indictment of the cryptocurrency industry, declaring that the sector is currently engulfed in a “crime supercycle” fueled by rampant scams, regulatory inaction, and the alleged complicity of major blockchain networks and DeFi protocols.
In a detailed social media thread, the crypto sleuth laid out a series of explosive claims, arguing that a lack of accountability has created a playground for cybercriminals, including state-sponsored actors like North Korea’s Lazarus Group. He revealed that the Tron Network caters to a $5 – $10 billion “Black U Market,” which the infamous Lazarus Group and other small OTC markets explore.
Tron’s Alleged $10B “Black U Market”
At the heart of ZachXBT’s criticism is the Tron Network. He alleges that the blockchain has become the backbone for a “$5 – $10 billion ‘Black U Market’,” a parallel financial system used by illicit actors.
The blockchain analyst believes lenient regulations and the lack of accountability for bad actors also contributed to the rising number of unwanted activities in the cryptocurrency sector.
Related: North Korea-Linked Lazarus Group Targets BitMEX Employee with Phishing Scam
For context, ZachXBT cited a few examples, including how easy it was for money laundering groups and small OTC traders to aid the notorious Lazarus Group from North Korea in moving stolen funds from the recent attacks. The investigator mentioned the attacks on DMM Bitcoin, Bybit, and WazirX as examples of how a flawed system enables unwanted behavior in the crypto industry.
Are DeFi Protocols Profiting from Crime?
As bad as ZachXBT describes the ongoing situation, he indicted DeFi protocols, criticizing them for enabling crypto hacks because of the passive profits they earn from stolen funds.
According to the investigator, over 50% of the DeFi platforms’ earnings come from illicit sources. Hence, they ignore when criminals move funds across the blockchain ecosystem, leaving influencers to promote crypto scams without repercussions.
Outdated Laws Aiding Exploiters
ZachXBT criticized the current laws applied to crypto matters, describing them as outdated. According to him, the legal systems are lagging, and the courts are increasingly siding with smart contract exploiters because of old laws. He considers this a significant factor aiding the propagation of crypto scams.
Related: North Korean Cybercrime: Lazarus Group Launders Millions Through Cambodian Firm
Therefore, the blockchain investigator believes in the need for fundamental changes within the crypto industry. According to ZachXBT, people should not wait until they lose money before deciding to participate in fixing the ecosystem unless they want the current trend to continue.
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