Garden Finance Scandal: 25% Funds Tied to Stolen Assets, ZachXBT Exposes Damning Truth

Garden Finance, a Bitcoin bridge platform promising seamless cross-chain transactions, has been thrust into a firestorm of controversy. On-chain investigator ZachXBT has uncovered that over 25% of the platform’s historical activity is linked to stolen funds, with some estimates suggesting a staggering 75% of total volume could be illicit, as detailed in a recent investigation by ZachXBT. This bombshell comes on the heels of a security exploit that drained over $10.8 million across multiple blockchain networks, alongside accusations of facilitating North Korean money laundering. As champions of decentralization, we’re here to unpack the mess, call out the failures, and dig into what this means for Bitcoin and the broader crypto space.

• Massive Exploit: Garden Finance hacked for $10.8M+ across various blockchains.
• Dirty Money: ZachXBT reveals 25-75% of processed funds are stolen.
• Ethical Nightmare: Allegations of enabling DPRK hacks and ignoring victims.

Crypto 101: Breaking Down the Basics

For those new to the space, let’s clarify some key concepts before diving deeper. A Bitcoin bridge, like Garden Finance, is a protocol that lets Bitcoin work on other blockchains, such as Ethereum or Solana, by converting BTC into a “wrapped” version—a token representing Bitcoin that can be used in decentralized finance (DeFi) apps for faster trades or lending. Atomic swaps are trustless, direct exchanges between different cryptocurrencies without a middleman. A liquidity node refers to a point of control in a network that manages funds for transactions; when it’s singular, it’s a centralization risk. Finally, money laundering in crypto often involves swapping stolen digital assets across chains to hide their origins, much like shuffling dirty cash through multiple bank accounts. Got it? Let’s move on to the scandal.

Origins of a Scandal: From Ren Protocol to Garden Finance

The roots of Garden Finance’s troubles trace back to its predecessor, Ren Protocol, a Bitcoin bridge that processed over $13 billion in transactions during the DeFi boom of 2020-2021. Ren raised $67 million through an initial coin offering (ICO) and venture capital, promising to revolutionize cross-chain Bitcoin transfers. But it wasn’t all rosy—blockchain intelligence firm Elliptic later revealed that over $540 million of Ren’s flows between 2020 and 2025 were tied to illicit sources, including ransomware groups like Conti and Ryuk. Acquired by Alameda Research in 2021 and integrated into Solana’s ecosystem, Ren collapsed after the FTX implosion in 2022, stranding $12 million in user Bitcoin with no clear path to recovery. Users were left fuming, and trust in the project was shattered.

Enter Garden Finance in 2023, launched by former Ren developers like Susruth Nadimpalli and led by co-founder Jaz Gulati. Marketed as “the next generation of Bitcoin transfers” with atomic swaps enabling 30-second BTC transactions, it aimed to rebuild on Ren’s ashes. But as ZachXBT’s investigation shows, it inherited not just the tech but also the baggage. The question looms: did the team learn nothing from Ren’s past, or is this willful negligence on steroids?

The Exploit Unpacked: $10.8 Million Down the Drain

Fast forward to the latest disaster—Garden Finance suffered a brutal security breach, losing over $10.8 million across multiple blockchain networks. This wasn’t just a glitch; it exposed glaring vulnerabilities in a platform that prides itself on innovation. Hackers exploited weaknesses, siphoning funds while users watched helplessly. The team’s response? An on-chain message offering a paltry 10% white-hat bounty to the exploiter. Sorry, but a dime on the dollar doesn’t exactly scream accountability—it’s more like a desperate plea to sweep this under the rug.

Technical failures aside, the bigger issue is how Garden Finance became a magnet for bad actors even before this hack. Between April and July 2025, the platform reportedly earned six-figure profits from processing hacked proceeds. Take the Bybit hack, a jaw-dropping $1.4 billion heist. Within just 48 hours, $160 million of those stolen funds flowed through Garden Finance, netting the platform over $300,000 in fees. If that’s not a neon-lit red flag, I don’t know what is. Victims of hacks tied to Bybit and platforms like Swissborg are left with no recourse, watching their assets get mixed through services like Coinbase’s cbBTC. Meanwhile, Garden Finance cashes in.

Illicit Flows and the Lazarus Group Connection

The accusations get even uglier. Garden Finance has been linked to money laundering for North Korea’s infamous Lazarus Group, a state-sponsored hacking collective. In 2024 alone, Lazarus stole over $1.3 billion across 47 incidents, with another $2.2 billion taken in the first half of 2025. Their playbook? Steal Ethereum or other tokens, swap them for Bitcoin via bridges like Garden Finance on networks such as Solana, Arbitrum, and Base, and funnel the proceeds to fund the DPRK’s weapons program. It’s not just a security lapse; it’s a geopolitical disaster unfolding on the blockchain.

ZachXBT and fellow investigator Tayvano have been relentless in calling out the platform’s role. ZachXBT didn’t mince words, stating:

“I sincerely hope a government puts your team in prison with Diddy next cycle for ignoring victims like Bybit after >25% funds bridged are stolen funds.”

Tayvano echoed this, accusing the team of “blockchain illiteracy” and “willful blindness” in obscuring Lazarus Group activity. A particularly damning move was Garden Finance raising its swap limit to 10 BTC earlier in 2025, seemingly inviting large-scale abuse by illicit entities. For a platform claiming to push Bitcoin’s boundaries, this looks less like innovation and more like a cash grab at victims’ expense.

Centralization Concerns: A Mockery of Decentralization

Here’s where the hypocrisy stings. Decentralization is a cornerstone of crypto’s ethos—power to the people, no single point of failure. Yet Garden Finance operates with liquidity controlled by a single dominant node, creating a chokehold that contradicts everything decentralization stands for. Compare this to other Bitcoin bridges like Wrapped Bitcoin (WBTC) by BitGo, which, while not perfect, distributes control across multiple custodians to reduce risk. Garden Finance’s setup isn’t just a vulnerability; it’s a betrayal of trust, prioritizing ease of operation (or profit) over user safety.

This centralization raises a brutal question: if a platform can’t uphold the core values of crypto, why should users—or regulators—give it a pass? When liquidity is bottlenecked through one node, hacks or internal mismanagement become far more devastating, as we’ve seen with the $10.8 million exploit. For Bitcoin maximalists, this might reinforce the belief that BTC’s native chain needs no such bridges. But for DeFi to grow, cross-chain solutions must exist—and they must be built right.

Industry Fallout and Regulatory Shadows

The crypto community isn’t staying silent. Beyond ZachXBT and Tayvano, murmurs of discontent are growing. Developers on social platforms have criticized Garden Finance’s cavalier attitude, while some exchanges are reportedly wary of associating with any tokens or services tied to the platform. Binance, for instance, delisted Ren Protocol’s token (REN) years ago over reputational risks linked to illicit flows. If history is any guide, Garden Finance could face similar ostracism.

Then there’s the regulatory angle. Governments worldwide are cracking down on crypto money laundering, with the U.S. Treasury targeting mixers and bridges that obscure fund origins. Scandals like this only fuel the fire for stricter oversight. Could Bitcoin bridges face outright bans or crippling compliance costs? It’s a real risk, and while we advocate for freedom and disruption of the financial status quo, ignoring victims and profiting from dirty money hands ammo to regulators itching to clamp down on DeFi. Garden Finance’s mess isn’t just their problem—it’s a black eye for the entire ecosystem.

Counterpoints: The Permissionless Dilemma

Let’s play devil’s advocate for a moment. Some might argue that Garden Finance isn’t directly responsible for the actions of bad actors. Permissionless systems, by design, are open to all—hackers included. If Lazarus Group exploits a bridge, isn’t that a flaw of the broader crypto landscape rather than one platform’s fault? After all, Bitcoin itself has been used for illicit transactions, yet we don’t blame Satoshi. Shouldn’t innovation take precedence over policing every transaction?

Here’s the rebuttal: there’s a difference between open access and turning a blind eye. Earning six-figure fees from stolen funds while offering no restitution to victims like Bybit isn’t innovation—it’s exploitation. Ethical oversight isn’t anti-crypto; it’s pro-survival. If DeFi wants mass adoption, trust is non-negotiable. Platforms like Garden Finance can’t hide behind “permissionless” as a get-out-of-jail-free card while centralized control of liquidity makes them anything but decentralized. Innovation must accelerate, yes, but not at the cost of integrity.

Moreover, let’s not forget the role of altcoins and Ethereum-based systems here. While Bitcoin remains king for many of us, cross-chain swaps often involve ERC-20 tokens and other networks filling niches BTC doesn’t serve. Ethereum’s smart contracts and Solana’s speed enable DeFi use cases that Bitcoin’s simplicity can’t match. Garden Finance’s failures highlight why these ecosystems must coexist with Bitcoin—but only with robust security and accountability.

What’s Next for DeFi and Bitcoin Bridges?

The Garden Finance debacle is a gut check for the crypto space. As advocates of effective accelerationism—pushing tech forward at full throttle—we see the potential of Bitcoin bridges to expand BTC’s utility. Imagine AI-driven on-chain monitoring or decentralized auditing tools catching illicit flows before they spiral. These solutions, not heavy-handed regulation, are the future we should fight for. But until then, platforms must step up. Garden Finance’s leadership needs to offer transparency, restitution, and a complete security overhaul, or they risk becoming a cautionary tale in DeFi history.

For Bitcoin maximalists, this reinforces a hard truth: BTC’s core protocol remains a bastion of security and freedom, untarnished by bridge failures. The problem isn’t Bitcoin; it’s the Wild West of DeFi experiments tacked onto it. Yet for the broader revolution to succeed, including altcoins and other chains carving out their roles, trust must be ironclad. If decentralization is our north star, platforms like Garden Finance must be held to the fire—or we risk losing the very foundation that fuels this financial uprising.

Key Takeaways and Questions

• How much of Garden Finance’s activity is linked to stolen funds?
  ZachXBT reports over 25% of historical activity involves stolen assets, with estimates suggesting up to 75% of total volume could be illicit.
• What’s the connection to North Korean hacking groups?
  Garden Finance is accused of facilitating money laundering for the Lazarus Group, swapping stolen Ethereum for Bitcoin across chains like Solana, potentially funding DPRK weapons programs.
• Why is centralization a major issue for Garden Finance?
  Despite claiming decentralization, liquidity is controlled by a single node, creating vulnerabilities and undermining trust compared to truly distributed systems.
• Should Bitcoin bridges face stricter accountability?
  Damn right—while they drive innovation, profiting from hacked proceeds and ignoring victims demands both community backlash and regulatory scrutiny.
• Could regulatory crackdowns follow this scandal?
  Highly likely, as governments target crypto money laundering; scandals like this could lead to tighter rules or bans on bridges, impacting all of DeFi.
• Can Garden Finance recover from this mess?
  Not without radical transparency, victim compensation, and a security rethink—otherwise, it’s just another graveyard in the DeFi landscape.