The paper, published in the Journal of Financial Crime, was co-authored by Professor Tim Hall of the University of Winchester's Department of Policing, Criminology and Forensics, and Remo Stieger, a former partner at SyntiFi Risk Intelligence. It is described as the first study to combine traditional criminological analysis with on-chain risk intelligence, drawing on SyntiFi's ORI engine to scan transactions across seven blockchains: Ethereum, Base, Optimism, Arbitrum, BNB Chain, Avalanche, and Polygon.
A flash loan is an uncollateralised cryptocurrency loan that must be borrowed and repaid within a single blockchain transaction. The mechanism is legal; attacks exploit weaknesses in DeFi protocols built on top of it. By borrowing large sums, artificially inflating the value of one token to exploit another protocol's pricing assumptions, and then unwinding the position and repaying the loan within the same transaction, an attacker can extract substantial value without committing any capital upfront.
Prof Hall said: "This research came about because of a shared concern about new criminal opportunities created by the advance of cryptocurrencies and blockchain technologies. We now are seeing crimes that we have never seen before and ones that are capable of stealing mind-boggling sums of money, often in the tens of millions of dollars."
Hall stressed the research has practical applications beyond academia. "We are keen that this isn't just seen as a piece of academic research. The analysis we did has a host of applications for the cryptocurrency industry, for regulators and for legal and law enforcement agencies."
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