Onchain Sleuth Doubts Crypto’s Ability to Self-Regulate

Onchain sleuth ZachXBT is expressing doubts over crypto’s sustainability after tracking and freezing funds from North Korea’s recent hacking of the centralized exchange, ByBit.

“I don’t know if the industry is going to fix this itself unless the government forcibly passes regulations that hurt our entire industry,” said ZachXBT in his Telegram group

“Several “decentralized” protocols have recently had nearly 100% of their monthly volume/fees derived from DPRK and refuse to take any accountability. Centralized exchanges end up being worse as when illicit funds flow through them, it takes multiple hours to respond when it only takes minutes to launder, “ he continued.

Zach considers know-your-transaction (KYT) to be “flawed and easily evadable” and deems know-your-consumer (KYC) useless due to purchased accounts.

The ByBit hack was the largest crypto hack ever and potentially the largest heist by fiat value in history, in which North Korean-based hackers known as the Lazarus Group exploited security solution Safe{Wallet} to reroute $1.5 billion in assets from ByBit’s wallets to their own.

The hackers used various laundering methods to wash the funds, such as Tornado Cash, eXch, Chainflip, Thorchain and potentially even through self-inflicted MEV transactions.

The Lazarus Group is also responsible for other major hacks, such as the $600 million Ronin Bridge hack, the $100 million Harmony Bridge hack, and the $63 million Munchables hack.