Chainalysis Highlights Rising Usage Of Crypto For Money Laundering

A recent report by blockchain analytics firm Chainalysis sheds light on the growing use of crypto in money laundering operations.

Key points:

• Nearly $100 billion in illicit funds transferred to conversion services since 2019.
• Record $30 billion in laundered funds identified in 2022
• Crypto mixers, cross-chain bridges, and wallet “hops” are common laundering techniques

The cross-border nature of crypto, combined with quick transactions and relatively low fees, makes them an attractive option for money launderers.

This trend has expanded beyond crypto-native crimes to include funds from activities such as drug trafficking and fraud.

Also read: Hong Kong Crypto Scam Bust: Police Seize Nearly 11,000 Counterfeit Banknotes

Close to $100 billion funneled using crypto

According to Chainalysis, since 2019, about $100 billion in money from known criminal wallets has been channeled through conversion services. In these transactions, cryptocurrencies were exchanged for fiat currency.

The peak of this activity was observed in 2022, with $30 billion identified as laundered funds.

Launderers employ various techniques to hide the trail of illicit funds. Crypto mixers blend assets from multiple sources, making it challenging to trace their origin.

Cross-chain bridges are exploited to move funds between different blockchain networks. Additionally, a technique known as “hopping” involves transferring funds through several intermediary personal wallets to evade detection.

The rise of sanctioned exchanges, such as the Russian platform Garantex, has played a major role in facilitating these illicit activities. These services provide launderers with a means to convert illegitimately-obtained crypto into cash.

Also read: Hong Kong Shares List Of 7 Suspicious Crypto Exchanges

However, the transparent nature of blockchain technology allows for more accurate tracing of financial flows compared to traditional banking systems. This provides law enforcement with enough data on the movement of funds.

Chainalysis anticipates that crypto-based money laundering will become increasingly prevalent as digital assets becomes more mainstream.