The blockchain investigator, Zachxbt, raised concerns about the capacity of the cryptographic industry to combat security violations and illicit fund movements following his involvement in the frost of the recent Hack bybit funds.
He argued that persistent vulnerabilities and inadequate responses of key actors allow malicious actors to exploit large -scale weaknesses.
Systemic failures
Zachxbt said many of these exploits are caused by problems from fundamental defects in decentralized and centralized platforms.
According to his conclusions, certain “decentralized so -called protocols” generate almost all their volumes and income from illicit actors, such as the Democratic People’s Republic of Korea (RPDC).
He noted that these platforms do not take responsibility for facilitating illegal financial activity. Meanwhile, centralized exchanges delayed the response to the verified intelligence of threats, allowing stolen assets to be bleached in a few minutes.
In addition, the Know-Your-Transaction (KYT) solutions designed to detect illegal funding movements are frequently bypassed. At the same time, Know-Your-Customer (KYC) measures often fail due to compromised user data and the possibility of buying accounts.
Zachxbt stressed that KYC’s problems are not exclusive to crypto and reflect wider regulatory failures in financial surveillance.
Obstacles to effective solutions
While recognizing the risks of excessive government intervention, Zachxbt said that he doubted that the industry could disagree effectively.
He has identified several obstacles to significant reform, such as major exchanges and services without rapid response teams capable of fighting information on verified threats in real time.
In addition, these platforms often fail to support users affected by hacks, sometimes retaining account data to limit responsibility. The legal recovery process for the victims is slow, certain exchanges resisting efforts to return stolen funds.
Centralized Stablecoin issuers do not block addresses directly linked to major hacks, allowing illegal actors to keep access to the liquidity of stablescoin. He claims that the conformity tools used by large companies like Coinbase and Circle do not regularly report an illegal activity.
Meanwhile, some decentralized protocols do not reassess their design despite most of their volume of transactions from illicit sources.
Zachxbt highlighted the new blockchain networks and transversal bridges that neglect the basic analysis or security measures. He also reported over -the -counter negotiation bunches in China operating on Tron, which continue to manage high volumes of illicit funds with little surveillance.
Despite the increase in these concerns, Zachxbt specifies that it does not argue increased government surveillance, but underlines non-compliance with the cryptography sector to fill the security gaps proactively.
Without improvements to the industry level in the response to incidents, the policies of stablecoin issuers and the integration of analysis, it is unlikely that the problem will be solved. Zachxbt’s results suggest that, for the moment, illicit actors remain measures ahead of industry security measures.
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