Bridge Risk
The compound risk - exploit, custody, sanctions, AML - associated with cross-chain bridges that move value between independent blockchains.
Definition
A cross-chain bridge is a protocol that moves value or messages between independent blockchains. From a compliance perspective, bridges concentrate four risks: smart-contract exploit risk (the largest single source of crypto losses 2021–2023), custodial risk where the bridge holds reserves, sanctions risk where bridge usage obscures attribution, and AML risk where bridges serve as layering infrastructure.
Surveillance treatment
- Bridge usage alone is not a red flag - most volume is legitimate.
- Bridge usage combined with mixer interaction, high-risk-jurisdiction wallets, or hop-count anomalies is a meaningful escalation.
- Wrapped-asset accounting requires explicit modelling - a deposit on chain A producing a mint on chain B is one logical transaction, not two.
Notable historical exploits
Ronin (March 2022, ~$625m), Wormhole (Feb 2022, ~$326m), Nomad (Aug 2022, ~$190m), Multichain (July 2023, ~$130m). Sanctioned addresses associated with the DPRK-aligned Lazarus Group have been the largest single attribution category, making bridge-flow attribution a sanctions-screening priority.