According to a Chainalysis analysis, money launderers are increasingly employing cryptocurrencies to hide the source and flow of monies that were obtained unlawfully.
According to the paper, which examined trends and more modern methods of money laundering, cryptocurrency is being utilized for off-chain crimes, including fraud and drug trafficking, because it is “cross-border, virtually instant, and generally inexpensive to transact.”
“The growing ubiquity of crypto has made it a tool for laundering proceeds from various off-chain crimes, such as narcotics trafficking and fraud. In 2024, money laundering in crypto encompasses all crime — not just that which is inherently tied to the crypto ecosystem,” the blockchain analytics firm said in a July report.
This occurs while the value of bitcoin, the largest cryptocurrency in the world, has increased by around 55% so far this year, according to LSEG.
Money launderers utilize a variety of techniques to hide the movement of funds, including cross-chain bridges, cryptocurrency mixers, and “hops” between wallets.
To make it harder to determine the source and ownership of cryptocurrency, tumblers, also known as crypto mixers, combine cryptocurrency from several sources. Moreover, dishonest individuals use crypto bridges to transfer money across other blockchain networks, concealing its source.
Moving money across multiple intermediate personal wallets in “hops” is a way to evade being discovered.
Based on statistics from Chainalysis, since 2019, around $100 billion in cryptocurrency has been moved from known criminal wallets to conversion platforms, where it is exchanged for fiat cash. $30 billion was the largest sum that was found in 2022.
The Russian cryptocurrency exchange Garantex, whose services give money-launderers a way to convert cryptocurrency obtained illegally into cash, is primarily to blame for the record amount.
However, Chainalysis stated that it is still possible to find these illegal actions.
The transparency of blockchain technology makes it possible to track and evaluate instances of cryptocurrency laundering more quickly and accurately than with traditional financial systems. Nevertheless, the research stated that additional instances of cryptocurrency laundering are anticipated.
The blockchain analytics company stated, “As the global acceptance of cryptocurrencies grows and barriers to entry diminish, Chainalysis expects this type of money laundering to become more significant, as illicit actors historically co-opt new technologies for their own purposes.”
