Garden Finance Linked to Lazarus Hack, Crypto Scam Claims

Crypto Bridge Under Fire: Garden Finance Faces Allegations of Laundering North Korean Lazarus Hack Funds

In a rapidly unfolding controversy that has rocked the decentralized finance (DeFi) sector, Garden Finance, a self-described trustless Bitcoin bridge, has been accused of facilitating the laundering of stolen cryptocurrency linked to North Korea’s infamous Lazarus Group. The allegations, spearheaded by blockchain investigator ZachXBT, have ignited debate about the true decentralization of crypto bridges and the growing risk of these platforms being exploited by international cybercriminals.

The Accusation: Over 80% of Fees Tied to Illicit Funds

On June 21, 2025, ZachXBT, known in the crypto world for his investigative work tracking stolen digital assets, took to X (formerly Twitter) to make a bold claim. He asserted that more than 80% of Garden Finance’s recent fee income was generated by helping move funds stolen during the Lazarus Group’s $1.4 billion Bybit hack that occurred earlier this year.

According to ZachXBT’s analysis, the bridge served as a major laundering route for assets siphoned from Bybit on February 21, 2025. In that attack, Lazarus allegedly exploited simulated approvals to drain over 401,000 ETH — worth around $1.4 billion at the time — from the crypto exchange.

“You conveniently left out that over 80% of your fees came from Chinese launderers moving Lazarus Group funds from the Bybit hack,” ZachXBT wrote in his post, directly addressing Garden Finance’s co-founder, Jaz Gulati.

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What the Blockchain Data Shows

ZachXBT’s accusations are backed by on-chain data. He reported that Garden Finance earned about 38.86 BTC in fees — equivalent to roughly $300,000 — during just 12 days of activity. In total, Garden is believed to have accrued around $4 million in fees to date.

More concerning to critics was the pattern of transactions. ZachXBT claimed that a single party repeatedly added liquidity to the bridge using cbBTC — a Coinbase-wrapped Bitcoin token — raising red flags about whether the platform’s claim of being decentralized holds up under scrutiny.

“Explain how it is ‘decentralized’ when I watched in real time as a single entity kept topping up cbBTC liquidity from Coinbase,” ZachXBT questioned publicly.

Source: X

This core criticism targets Garden Finance’s operational model. A bridge touted as trustless should, by definition, not depend on one or a few entities for liquidity. The implication is that Garden’s model may expose it to manipulation by bad actors — or worse, deliberate facilitation of illicit flows.

Garden Finance Responds: Claims of Misinformation

In response, Garden Finance’s co-founder, Jaz Gulati, rejected the allegations in strong terms. Gulati argued that the majority of fees — around 30 BTC — had been earned well before the Bybit hack ever took place. He shared internal records, including screenshots from the platform’s Discord channel, showing that substantial fees had been collected by October 2024, months before the Lazarus-linked event.

Labeling the accusations as “misinformation,” Gulati defended Garden’s operational integrity. He insisted that the bridge remains true to its principles of decentralization and that it was never designed or intended to serve as a laundering tool for criminal enterprises.

Garden’s Dune Analytics dashboard further reveals that the platform has processed 24,984 BTC — approximately $1.5 billion in value — across 40,571 swap transactions, earning a total of 40.11 BTC in fees. The data indicates that Garden is indeed a high-volume bridge, though the aggregate figures alone do not confirm or refute the laundering claims.

The Decentralization Debate

The accusations have reignited an ongoing discussion in the crypto community: what does true decentralization look like in the context of blockchain bridges?

Garden Finance brands itself as a trustless, decentralized service offering fast Bitcoin transfers across chains. Yet if, as alleged, one entity supplied most of the bridge’s liquidity during the period in question, critics argue that the system could functionally resemble a private or semi-centralized exchange — undermining its core selling point.

ZachXBT’s assertions suggest that bad actors might exploit such a setup to launder stolen funds while evading regulatory oversight. This, in turn, raises questions about the responsibilities of DeFi platforms in ensuring that their technologies are not misused.

Regulatory and Industry Implications

The Garden Finance saga comes at a time when regulators globally are paying closer attention to the role of DeFi in cross-border money laundering. Platforms that present themselves as decentralized could face greater scrutiny if they are seen as conduits for illicit finance.

The Lazarus Group, believed to be linked to North Korea’s state apparatus, has long been associated with cybercrime campaigns aimed at funding sanctioned activities. Their use of crypto mixers, bridges, and DeFi protocols has placed these platforms under the microscope of both law enforcement and financial watchdogs.

If proven, the allegations against Garden Finance could fuel calls for tighter regulations on DeFi infrastructure, including requirements for greater transparency, liquidity provider disclosures, and enhanced anti-money-laundering (AML) controls — even in so-called trustless systems.

What Happens Next?

For now, Garden Finance maintains its position, denying any wrongdoing and highlighting its prior earnings as evidence of compliance. However, the platform’s future could depend on its ability to demonstrate that it has not knowingly facilitated illegal activity, and that its model can withstand independent audits and regulatory reviews.

Meanwhile, ZachXBT’s investigation continues to reverberate throughout the crypto community. His work has drawn both praise for shining a light on potential misconduct and criticism from those who argue that decentralized systems should not be judged by the behavior of individual participants.

What is clear is that the Garden Finance controversy underscores a critical juncture for blockchain bridges: as these tools become integral to the future of multi-chain finance, their designs must strike a delicate balance between speed, efficiency, decentralization, and legal compliance.

The coming weeks may bring further revelations as independent analysts and regulators take a closer look at Garden’s operations and the broader risks posed by unchecked cross-chain transfers in the crypto ecosystem.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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