The Bybit hack was executed by Lazarus, a North Korea-linked cybercrime group. The FBI labeled the incident as the “TraderTraitor” operation. The stolen amount surpassed all North Korea-related cyber thefts in 2024. 

Lazarus’s “Flood the Zone” Tactic Exposed 

After the attack, Lazarus rapidly laundered the stolen funds through multidirectional, high-frequency transactions. This method, called “flood the zone” by TRM Labs, aims to overwhelm exchange compliance teams and blockchain analytics firms. 

TRM Labs stated, “This tactic involves intense, simultaneous transfers designed to drown regulators and analysts. The Bybit hack clearly showed an increased use of this method.” This reveals significant security gaps in the digital asset ecosystem. 

Meanwhile, Chainalysis experts traced suspicious wallets linked to a local crypto exchange in Greece. As a result, the assets held by the exchange were frozen. This step underlines the critical role of international cooperation in fighting crypto crimes. 

A New Chapter in Global Crypto Regulation 

Greek Finance Minister Kyriakos Pierrakakis commented on the case: “Thanks to blockchain’s traceability, international cooperation can stop financial crimes.” 

This operation may inspire similar actions in countries like South Korea and the U.S. Centralized exchanges such as Bybit must strengthen security after such attacks. The rise in investments across DeFi and CeFi platforms makes this increasingly important. According to DeFiLlama, the total value locked (TVL) reached $121 billion in July 2025. 

This development highlights cybersecurity as a top priority in crypto markets. Moreover, blockchain’s transparency enables more effective combat against cybercrime. 

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According to TRM Labs, over 63% of Yemen’s crypto-related web traffic is directed at DeFi platforms — far outpacing centralized exchanges, which account for only 18%.

With Banks Inaccessible, DeFi Fills the Gap

The ongoing civil war in Yemen, compounded by limited financial literacy and deteriorating infrastructure, has made access to banking services almost impossible for many citizens.

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TRM Labs reports:

“For those using crypto in Yemen, DeFi provides a degree of financial resilience when local banks are inaccessible or non-operational.”

DeFi Dominates Crypto Activity

• 63% of crypto-related traffic in Yemen is DeFi-based
• 18% comes from centralized global exchanges

Some also turn to peer-to-peer crypto transactions to move money across borders or facilitate remittances.

Sanctions Fueling Crypto Growth

The US Treasury’s renewed sanctions on the Houthis — including a January 2024 reclassification as Specially Designated Global Terrorists — appear to be a key driver in crypto adoption.

Following this action, a Yemen-based crypto exchange saw a 270% surge in transaction volume. Later, another 223% spike occurred after additional political developments.

TRM Labs notes:

“As traditional financial channels are blocked, cryptocurrencies offer a decentralized alternative — harder to trace and control.”

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Crypto Money Laundering Operation

Spanish law enforcement, in collaboration with Tron, Tether, and TRM Labs, has frozen $26.4 million worth of cryptocurrencies linked to a pan-European money laundering operation.

The operation involved cooperation with the T3 Financial Crimes Unit, an initiative launched in August 2024 and supported by the three blockchain firms.

The investigation relied on police surveillance to identify the criminal organization. Crypto wallets connected to illicit money laundering activities were identified through Know Your Customer (KYC) data from service providers. This represents the largest coordinated freeze operation conducted by the T3 Unit, adding to the $126 million recorded in its debut year.

Spanish Guardia Civil official: “This organization moved millions across borders, using both cash and crypto to help criminal groups launder their profits.”

Tron’s security efforts have reportedly reduced illegal transactions on its blockchain by up to $6 billion. According to TRM Labs, 49% of Tron’s illegal activities are linked to sanctioned entities, while 32% are tied to blacklisted funds.

Despite this, Tron remains the leading blockchain for illicit transactions, with 58% of such activities occurring on its network. Additionally, Tether’s USDT is the most commonly used asset in criminal activities.

Money Launderers Seek Alternatives

The use of centralized stablecoins like USDt and Circle’s USD Coin to freeze funds associated with criminal activities is a well-established practice. Stablecoin issuers have built-in mechanisms to block transactions linked to illegal activities.

Tether CEO Paolo Ardoino: “Let this be a clear warning — criminals who attempt to misuse Tether will get caught.”

In November 2023, Tether froze $225 million in USDT linked to pig butchering scams — fraud schemes involving coercion and relationship-building to swindle victims — following a U.S. Department of Justice investigation.

Southeast Asia has become a hub for such scams, often run by criminal syndicates. Victims of these operations include individuals who have been kidnapped and forced into scam operations at resorts.

Pig butchering syndicates reportedly launder their proceeds through a dark web marketplace called Huione Guarantee, which had once relied heavily on Tether. To avoid frozen funds, the platform launched its own stablecoin in September, according to security firm Elliptic.

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The T3 FCU has already made strides by freezing $12 million in USDT linked to scams and fraud. The task force leverages TRM Labs’ advanced intelligence tools to detect suspicious blockchain activity, furthering their efforts to eliminate criminal use of USDT, the largest stablecoin, with $60.7 billion issued on Tron alone.

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TRM Labs’ head of global investigations, Chris Janczewski, emphasized that while the total volume of illicit crypto activity is still low, the goal is to eliminate it entirely. This partnership signifies a proactive approach as stablecoins like USDT see increasing adoption.

In contrast, Circle, a competitor of Tether, stopped minting its USDC stablecoin on Tron in early 2024, citing concerns about risk management. The launch of the T3 FCU shows that Tron is working to address these risks and clean up its blockchain environment.

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At the meeting titled “In The Context of Crypto Crimes II: Evaluating Strategies to Combat Money Laundering,” Congress members discussed how malicious individuals use cryptocurrencies for money laundering.

With both parties focusing on money laundering regulations and laws, Republican leaders requested a more detailed review of AML (Anti-Money Laundering) in the Financial Services Committee, while Democratic leaders in the Senate planned to work on a special bill against money laundering.

Republican Representative French Hill from Arkansas, at the beginning of the session, proposed regulation forcing miners and validators to take more stringent measures in combating money laundering. Hill stated that miners and validators assume a similar role to internet service providers.

Hill also received opinions from former Treasury official Michael Mosier while questioning whether it was logical to apply BSA (Bank Privacy Act) requirements to miners and validators.

Mosier confirmed that miners and validators act like internet service providers.

“So, would forcing them, a validator or a miner, to be a money services business contribute in any way to preventing the financing of terrorism in crypto use?” Hill asked.

Mosier’s support for this suggestion and the fact that this would abolish the concept of customer emphasizes that cryptocurrency miners and validators need to act more transparently and accountable.

Republican Representative Warren Davidson from Ohio, by asking authorities what tools are provided to track malicious actors using digital assets, indicates the need to strengthen control and monitoring mechanisms in this field. Davidson emphasizes the importance of local authorities understanding these tools better, expressing that this will increase their trust.

Stephen Lynch from Massachusetts (House of Financial Services)

Democratic Representative Stephen Lynch from Massachusetts, by criticizing the AML standards in the digital asset sector, draws attention to the regulation and control deficiencies in the sector. Reminding of the $50 million fine paid by Coinbase to the state regulator of New York last month, he emphasizes that the compliance policies of companies in the sector are insufficient and this leaves them vulnerable to crimes such as money laundering. Lynch points out that inconsistencies among companies in the sector are a serious problem, considering the global nature of technology.

Democrat Representative Sean Casten from Illinois warned that illegal activities in the crypto world might be significantly underestimated. Casten is working on the House version of Warren’s bill in the Senate. Warren’s bill aims to strengthen banking secrecy law requirements for cryptocurrencies.

“If I say that I witnessed a crime in front of the police station last year, if no crime has been committed and therefore claim that there is no crime in my community, we would have some questions,” said Casten in his statement on Thursday.

At the hearing, senior member of the Atlantic Council Carole House stated that Blockchain analytics firms only see chain activity and therefore miss what happens outside the chain.

He also questioned the difficulties encountered by blockchain analysis companies when they start moving between blockchains while tracking illegal activities.

TRM Labs’ global policy president Ari Redbord told

TRM Labs’ global policy president Ari Redbord told Casten that the company tracks the flow of funds on 29 different block chains. He then added that tracked funds made it difficult to find bad actors’ ramps.

The second hearing focusing on crypto and illegal finance was held this week. At a House Financial Services Committee hearing on Wednesday, Treasury Secretary for Terrorism and Financial Intelligence Brian Nelson responded to data claims that Hamas, along with other militant groups, used crypto as a financing tool worth millions of dollars ahead of attacks in Israel, according to the Wall Street Journal statement.

However, it was stated that the data in this article came from the blockchain forensics firm Eliptic. Nelson said the numbers in the article were exaggerated.

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Blockchain intelligence firm TRM Labs, in a report published on January 5, 2023, revealed that North Korean-affiliated hacker groups were responsible for an estimated 33% of the cryptocurrency stolen in 2023.

North Korean Crypto Hacking on the Rise

According to the report, North Korean hackers stole potentially up to $700 million in cryptocurrency in 2023. The $600 million portion of this amount has been confirmed. North Korean hackers have stolen a total of approximately $3 billion worth of cryptocurrency since 2017.

TRM Labs’ research shows that North Korea is constantly developing its money laundering methods due to international sanctions. Hackers seize private keys during an attack and transfer funds to North Korean-controlled wallets, and then convert them to other cryptocurrencies such as USDT and TRX.

The company said, “The skill of North Korean hackers is encouraging businesses and governments to constantly innovate in terms of security.”

US Government Takes Action Against North Korean crypto-hacking (TRM Labs)

US Treasury Department officials have imposed sanctions on various individuals and hacker groups linked to North Korea, such as the Lazarus Group. The department said it continues to investigate North Korea’s other laundering methods following sanctions on cryptocurrency mixers such as Tornado Cash and Sinbad.

Global Efforts to Combat Crypto Crime

It is important to note that North Korea is not the only country with sophisticated cybercrime capabilities. Governments and businesses around the world are working together to combat crypto crime and protect investors. For example, in January 2023, the Financial Action Task Force (FATF) released updated guidance on virtual assets and service providers, which aims to help countries prevent and detect money laundering and terrorist financing risks associated with cryptocurrencies.

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The program to be implemented with the cooperation will test a global first, where Australian crypto users who enable two-factor identity verification in their crypto accounts will be paid Bitcoin valued at 10 AUD (6.6 USD).

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This application was initiated to coincide with the Australian government’s Fraud Awareness Week (27 November – 1 December). The announcement stated that the trial will test the impact on investment fraud levels by rewarding crypto customers for protecting their accounts and educating themselves on how to avoid fraud.

Two-Factor Identity Verification (2FA) is a security process that requires two identification formats to access resources. This method provides a higher level of security than single-factor processes where the user typically provides a single form of identification, usually a password or passcode.

The first 2000 customers in TRM Labs will be given a reward by Swyftx

The first 2000 customers who activate two-factor identity verification in their accounts and complete a course created with TRM Labs will be given a reward by Swyftx.

According to the announcement, Australians reported losses of 221 million AUD (146 million USD) in cryptocurrencies in 2022, a 162.4% increase from the previous year. This year, Swyftx, prevented 3 million AUD worth of customer funds from going to scammers.

Since the FTX crash, Australia has taken steps to tighten crypto regulations. These steps taken in 2023 included the Australian regulators’ measures against crypto companies like Block Earner and eToro.

Blockchain industry stakeholders have taken a stand against restrictions imposed by local banks on crypto payments; the Commonwealth Bank was one of the platforms that imposed partial restrictions citing fraud.

Binance Australia suspended bank transfer deposit and withdrawal transactions due to the decision of a third-party payment service provider. It appeared as though the Australian government and the Blockchain industry had later reached a consensus.

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