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2023 saw a notable decline in cryptocurrency transactions linked to illicit activities, Chainalysis said in a recent report, with $22.2 billion laundered through cryptocurrencies, down 29.5% from $31.5 billion the year before. .
crypto money laundering involves converting funds into cash using mechanisms that seek to obscure their origins. Such services could include brokerage services, personal digital wallets, cryptocurrency mixers and decentralized finance (DeFi) protocols, and fiat output services such as centralized exchanges and cryptocurrency ATMs.
Chainalysis attributed the year-over-year drop in illicit crypto activity to multiple factors, from lower cryptocurrency trading volume to new increased regulatory scrutiny. This latest development comes as US regulators have cracked down on services that cryptocurrency launderers previously relied on to obfuscate the origins of illicit funds.
In 2022, for example, the US Treasury Department sanctioned Tornado Cash, a popular cryptocurrency mixing service that allowed ethereum (eth-USD) users to mask their transactions, for its alleged use in currency laundering. virtual computer stolen by North Korean hackers. Fellow mixer Sinbad was also reportedly sanctioned and shut down in November 2023 for alleged ties to the North Korean hacking group.
As such, funds transferred to mixers from illicit addresses fell by almost half to $504.3 million in 2023 from $1 billion in 2022, according to the report. But increased regulatory pressure has led the Lazarus Group, a North Korean cybercriminal group, to adapt its money laundering tactics, using mixers like YoMix and cross-chain bridges to ultimately evade detection.
“The growth of YoMix and its adoption by Lazarus Group is an excellent example of the ability of sophisticated players to adapt and find replacement obfuscation services when previously popular ones are shut down,” the report says, noting that the YoMix activity quintupled in 2023.
In addition to bridges, the proportion of illicit funds destined for DeFi protocols grew last year. “DeFi's inherent transparency generally makes it a poor option for hiding the movement of funds,” Chainalysis noted. In 2022, whiteners became more reliant on centralized exchanges.
“The changes in money laundering strategy we have seen from crypto criminals like Lazarus Group serve as an important reminder that the most sophisticated illicit actors are always adapting their money laundering strategy and exploiting new types of crypto services,” says the report. crypto-money-laundering/” target=”_blank”>saying.
As cryptocurrencies become increasingly popular and also make their way into traditional markets, there have been many cases of cryptocurrency laundering around the world. In February 2022, the US Department of Justice arrested a couple who allegedly conspired to launder $4.5 billion in cryptocurrency stolen during the 2016 hack of the Bitfinex cryptocurrency exchange. Later that year, Chinese police arrested a gang of 63 people for allegedly laundering up to $1.7 billion using cryptocurrency.
Some countries have already introduced new rules for money transfers to prevent the use of crypto exchanges for money laundering, including Japan. In 2021, the Biden administration reportedly sought to crack down on crimes committed by virtual currency exchanges, mixing and flipping services, and bad actors that facilitate money laundering.
bitcoin (btc-USD) and ether (eth-USD) are the two largest digital tokens by market capitalization, representing approximately 70% of the broader $1.95 trillion crypto market. btc, in particular, is up more than 120% year-over-year, thanks to regulatory approval of the first US spot bitcoin exchange-traded funds, as well as speculation about rate cuts. interest. South African analysts weighed in on what could be next for btc.
