The activity may have been less concentrated since the arrest of two major criminal services was made in 2018, according to a report by blockchain intelligence firm Chainalysis.
Chainalysis stated that USD 8.6bn worth cryptoassets were laundered in 2021. This is a 30% increase over the USD 6.6bn reported the year prior.
The increase is “unsurprising” given the growth of crypto in general over the year, Chainalysis said, noting that the number only includes what it called “cryptocurrency-native crime,” and not “traditional” crime where fiat currency was later converted to crypto.
Researchers stated that DeFi protocols received 17% more funds from illicit wallets than 2% in the previous year. DeFi protocols received 1,964% more funds from illicit addresses year-over-year, which translated to USD 900m worth of total value in 2021.
Additionally, the value of illicit addresses received by mining pools, high risk exchanges and mixers saw significant increases.
Chainalysis said that although crypto has seen an increase in money laundering, it is still “heavily concentrated” on a few services. Many of these appear to have been “purpose-built for money laundering.”
According to their data, 58% of funds from illegal addresses were sent to five services in 2017, compared with 54% in 2020.
The firm suggested that law enforcement could be a significant blow to cryptocurrency-based crime, and significantly hinder criminals’ access to their digital assets through disrupting these services,” pointing out Suex as well as Chatex which were sanctioned by US Government over the past year.
Chainalysis also stated that it is possible that money laundering services have stopped operating after the crackdown against the two services. It also suggested that there is another possibility that money laundering activities are more widely distributed, reducing the amount of illegal activity.
According to the report, “Overall, cybercriminals have stolen more than USD 33 billion worth of cryptocurrency since 2017”. The firm revealed that crypto-based money laundering is relatively small in comparison to money laundering using fiat currencies.
Chainalysis stated that “for comparison, the UN Office of Drugs and Crime estimates between USD 800bn and US 2trn of fiat currencies is laundered every year — as high as 5% of global gross domestic product.”
