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Crypto Money Laundering Dropped 30% Last Year, Chainalysis Says
Illicit crypto activity has declined significantly in the last year, partly because of declining crypto trading volume and partly because sophisticated threat actors like the Lazarus Group are developing methods to evade detection, Chainalysis. said in its annual crypto money laundering report.
Chainalysis said $22.2 billion was laundered via crypto in 2023, up from $31.5 billion the year before. The decline was more pronounced than the decline in trading volumes, suggesting that factors other than just the general market slowdown may have contributed to the reduction in illicit activity. Figures suggest that only about 1% of all money laundering is done with crypto. The value of all laundered illicit funds is approximately $2 trillion per year, Deloitte wrote in a June 2023 report.
In 2023, the use of blockchain bridges and gambling services for cryptocurrency laundering increased, while in 2022, the use of illicit types of services and centralized exchanges increased .
“DeFi’s inherent transparency generally makes it a poor choice for obfuscating fund movements,” Chainalysis said.
For example, Hamas, listed as a terrorist group by the United States, the United Kingdom, the European Union and other countries, has experienced a significant share of crypto that he raised and tracedAnd closed crypto accountsdue to the transparency of the blockchain.
The Lazarus Group, a threat actor based in North Korea, has adapted its money laundering strategies to avoid the same fate, Chainalysis said.
“The growth of YoMix and its adoption by the Lazarus Group is a great example of the ability of sophisticated players to adapt and find replacement obfuscation services when previously popular services are shut down,” Chainalysis wrote.
As bridges gain popularity due to the Lazarus Group’s preference, the value of funds sent to mixers from illicit addresses has almost halved, to $504.3 million.
“This is likely largely due to enforcement and regulatory efforts, such as sanctions and the closure of the Sinbad mixer in November 2023,” Chainalysis noted.
The US Treasury has sanctioned crypto mixer Sinbad for its alleged ties to the North Korean hacking group, leading to its website being seized by the FBI, Dutch and Finnish authorities. CoinDesk reported at the time.
“The changes in money laundering strategy we have observed from crypto criminals like Lazarus Group are an important reminder that the most sophisticated illicit actors are always adapting their money laundering strategy and exploiting new types of crypto services,” concluded Chainalysis.