Cryptocurrency analysts have uncovered that over $100 billion in digital assets have been laundered through various exchange services over the past five years.
- Since 2019, nearly $100 billion has been sent from wallets linked to illegal activities to exchange services.
- Centralized exchanges, DeFi projects, mixers, gambling resources, and cross-chain bridges are the primary methods used for laundering.
- 2022 saw the highest volume of these transactions, exceeding $30 billion.
- Stablecoins are frequently used for illicit transactions, contributing to the risk of fund freezes by issuers.
- Mixers and privacy-focused coins like Monero and Zcash are also popular among criminals.
- Centralized exchanges still handle over half of the laundered assets.
Chainalysis: Over $100 Billion Laundered Through Exchange Services Since 2019
According to a new report by Chainalysis, nearly $100 billion in digital assets tied to criminal activities have been funneled into various exchange services since 2019. These services include centralized exchanges (CEX), decentralized finance (DeFi) protocols, mixers, gambling platforms, and cross-chain bridges.
Record High in 2022
The report highlights that 2022 saw the highest volume of such transactions, with over $30 billion laundered. This spike is attributed to operations involving services under sanctions, such as the Russian exchange Garantex.
Role of Stablecoins
Chainalysis analysts noted that a significant portion of these illegal transactions involves stablecoins. The rising popularity of stablecoins may contribute to their use in illicit activities. However, this also adds a risk for those laundering money, as stablecoin issuers like Circle and Tether have the ability to freeze funds. Tether has reportedly frozen around 1,600 addresses holding approximately $1.5 billion USDT.
Mixers and Privacy Coins
Mixers remain one of the most popular tools for laundering funds. While their primary goal is to enhance privacy, not all transactions processed by mixers are illegal. Additionally, privacy-centric coins like Monero and Zcash complicate tracking efforts. The number of transactions using Monero has been increasing, according to Chainalysis.
Cross-Chain Bridges
Criminals are increasingly using cross-chain bridges to obscure the origin of illegally obtained funds. Despite this trend, more than half of the laundered assets end up on centralized exchanges. These platforms are favored for their high liquidity, ease of converting crypto to fiat, and integration with traditional financial services.
Improving Compliance
The report also indicates a noticeable decrease in funds flowing into centralized exchanges—from nearly $2 billion per month at its peak to about $780 million per month. This suggests that anti-money laundering (AML) programs at these platforms are becoming more effective.
In summary, while the methods and tools for laundering money through cryptocurrency are evolving, the increasing effectiveness of AML measures on centralized exchanges indicates a positive trend towards curbing illicit activities in the crypto market.
