Money laundering facilitated by crypto and the platforms that enable digital asset transactions exp[experienced a notable decline in 203 when compared to the year prior. According to a report by Chainalysis, in 2023, $22.2 billion was laundered in contrast to $31.5 billion laundered in 2022. So, what caused this decline in money laundering? Chainalsys states that it can be attributed to the overall drop in crypto activity – both legitimate and illicit.
The report states that centralized exchanges, as opposed to DeFi platforms, are the marketplaces of choice for the bad guys. DeFi takes second place but centralized leads by far.
The report adds that there has been a huge increase in stolen funds sent via cross-chain bridges – increasing by almost 2000% in 2023 as well as a rise in utilizing gambling platforms.
The end goal of the money launderers is frequently to migrate to fiat currency. Chainalisys states that 71.7% of these funds went to just five services without pointing fingers at the scofflaws.
To quote the report:
“In 2023, 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each, and collectively, they received $3.4 billion in illicit cryptocurrency. While that still represents significant concentration, in 2022, only 40 addresses received over $10 million in illicit crypto, for a collective total of just under $2.0 billion. In 2022, just 542 deposit addresses received over $1 million in illicit cryptocurrency, for a total of $6.3 billion, which was over half of all illicit value received by centralized exchanges that year. In 2023, 1,425 deposit addresses received over $1 million in illicit cryptocurrency, for a total of $6.7 billion, which accounts for just 46% of all illicit value received by exchanges for the year.”
The majority of crooks are using bridges and mixers in an attempt to hide their tracks.
In regard to mixers, their usage declined in 2023 when compared to 2022, with YoMix experiencing a dramatic increase in usage during the year after sanctions and shutdowns impacted other providers – like Tornado Cash, which was the target of the US Department of Treasury enforcement action.
Chainalysis reports that YoMix is the preferred mixer of the nefarious Lazarus Group.
Just like other scammers, the bad guys adapt and change tactics over time as the cat-and-mouse saga continues. As regulators and law enforcement ratchet up their crypto skills, the criminals look to exploit new tactics and adopt new strategies. Some things will never change.
Always an interesting read, the Chainalysis report is available here.