Threat actors utilized cryptocurrency to launder a staggering $8.6 billion last year, as reported by Chainalysis, a company specializing in blockchain analysis and investigation software. This figure, although significant, may actually be higher when considering crimes that do not exclusively involve cryptocurrency.
Chainalysis recently released findings from a forthcoming report, indicating a 30% increase in the value of money laundering activities conducted through cryptocurrency in 2021. However, the report highlights that these statistics primarily account for funds originating from “cryptocurrency-native” crimes, such as cyber-criminal activities like darknet market sales and ransomware attacks.
The monitoring of money laundering activities involving cryptocurrency is relatively more straightforward due to the transparent nature of blockchain technology. Despite the perception of the cryptocurrency world as a lawless frontier, efforts to track illicit financial activities have become more effective in recent years.
Interestingly, decentralized finance (DeFi) protocols received the largest share of illicit funds last year, surpassing centralized exchanges for the first time since 2018. The total value received by DeFi protocols from illicit sources skyrocketed by 1,964% to reach $900 million in 2021. Chainalysis pointed out that North Korean hackers, who reportedly stole around $400 million in cryptocurrency last year, heavily utilized DeFi platforms for their illicit activities.
While the concentration of money laundering activities remains limited to a select few services, the analysis revealed a slight decrease in this trend compared to the previous year. More than half, specifically 55%, of cryptocurrency transferred from illicit addresses was funneled to just 270 service deposit addresses. Notably, some of these addresses were linked to exchanges like Suex and Chatex, which were sanctioned by the US Treasury in 2021.
Chainalysis emphasized the significance of law enforcement intervention in disrupting cryptocurrency-based crimes and impeding criminals’ access to their digital assets by targeting these services. By targeting key players in the illicit financial ecosystem, authorities can make a substantial impact in combating money laundering activities involving cryptocurrency.