Chainalysis Report: Crypto Money Laundering Sees 30% Drop in 2023
In 2023, just over $22 billion worth of cryptocurrency was laundered, marking a 30% decrease from the previous year. Chainalysis, a blockchain analysis company, revealed in a recent report that nefarious actors have shifted their techniques to evade investigators and remain hidden.
Decrease in Crypto Money Laundering
While the overall decrease in crypto transaction volumes during the same period could partially explain the decline in crypto money laundering, the decrease was only 15%. Centralized exchanges continue to be the primary destination for funds sent from illicit addresses, a trend that has persisted for the past five years. However, the share of funds going to decentralized finance (DeFi) protocols has increased as they have gained popularity. Despite this, the inherent transparency of DeFi protocols makes them less suitable for money laundering, according to the report.
New Money Laundering Tactics
One major change in tactics observed by Chainalysis was the increased use of a new mixer called YoMix following the takedown of Sinbad. The report suggests that the North Korean Lazarus Group may be using this Bitcoin mixer to launder funds, as evidenced by a more than five-fold increase in inflows in 2023. Despite this, the total value of unlawful funds moving to mixers nearly halved, dropping from $1 billion in 2022 to $504 million in 2023.
Moreover, Chainalysis noted a significant uptick in the use of cross-chain bridges, which enable users to transfer funds from one blockchain to another. In 2023, bridge protocols received $744 million in crypto from illicit addresses, up from $312 million in the previous year. The positive aspect is that blockchain analysts can trace these funds, providing a means to combat money laundering.
Adapting to Combat Money Laundering
The report emphasized that the evolving money laundering strategies employed by crypto criminals like the Lazarus Group underscore the need for law enforcement and compliance teams to stay informed and adapt. By studying these new laundering methods and understanding the on-chain patterns associated with them, authorities can enhance their effectiveness in combating illicit activities.
Overall, the decline in crypto money laundering in 2023 signals a shift in tactics by nefarious actors, highlighting the importance of continued vigilance and adaptation in the fight against financial crimes in the cryptocurrency space.