Money laundering in the context of cryptocurrencies tends to be associated with cybercriminals trying to conceal the flow of funds related to blockchain crimes, such as ransomware operations and darknet market operations. However, cryptocurrency is being used to launder funds from a wider variety of illicit activities more and more often.
Security and monitoring are improving
According to the latest Chainalysis report on money laundering and cryptocurrency (July 2024), cybercriminals have sent almost $100 billion in funds from known illicit wallets to mixers since 2019.
The peak was in 2022, with over $30 billion, followed by 2023, in which the funds sent declined to $24 billion. Most transactions involved Garantex and other sanctioned services.
The amount of funds sent so far this year is less than $8 billion, which indicates that security and monitoring are improving.
Values do not include amounts that middlemen transfer
The above-cited amounts represent the dollar value of the assets when they leave the wallets. They do not include the value middlemen send and receive. Transactions between intermediary wallets can involve transfers from a cybercriminal to a professional money laundering service or a person sending crypto through their own private wallets.
Chainalysis believes these middlemen’s wallets are mostly personal ones, although they could include unidentified services. Intermediary wallets frequently comprise more than 80% of the total value passing through these laundering channels.
Middlemen wallets moving illegal funds are increasing
The total number of intermediary wallets moving illegal funds is steadily increasing, from fewer than 7.5 million in early 2019 to almost 12.5 million in early 2023. Stablecoins represent a rising portion of illicit funds passing through them, leading the analysts from Chainalysis to conclude that stablecoins now comprise the majority of illicit transaction volume.
This increase in their use possibly reflects the overall rise in stablecoin adoption over the last several years. All market players prefer to hold funds in a stable asset that’s impervious to market swings. However, using stablecoins is risky because their issuers can freeze funds, making them less than ideal for a number of purposes.
