The blockchain-based data platform – Chainalysis – estimated that the total cryptocurrency value laundered in 2021 was $8.6 billion – 30% more than 2020. According to the company, though, such an increase is somewhat expected given the considerable growth of the asset class in the past year.
Crypto Money-Laundering Is on The Rise
In its most recent report, Chainalysis informed that cybercriminals dealing with cryptocurrencies share one common goal: move their “ill-gotten funds to a service where they can be kept safe from the authorities and eventually converted to cash.”
In line with the industry’s rapid expansion in 2021, illegal operations involving bitcoin and the altcoins have also surged, the company noted. While in 2020, bad actors laundered $6.6 billion worth of digital assets, the number increased to $8.6 billion in 2021.
Nearly 17% of the $8.6 billion were transferred to Decentralized Finance applications, up from 2% in 2020. The report added that mining pools, high-risk exchanges, and mixers also saw significant growth in value received from illegal addresses.
Chainalysis explained that these numbers account only for funds derived from “cryptocurrency-native crime,” including darknet market sales or ransomware attacks.
“It’s more difficult to measure how much fiat currency derived from off-line crime – traditional drug trafficking, for example – is converted into cryptocurrency to be laundered. However, we know anecdotally this is happening,” the company concluded.
Crypto-Based Crimes in 2021
Theft and scams remained the main type of cryptocurrency crimes in the past year. Wallets associated with theft sent nearly half of their stolen funds to DeFi applications – more than $750 million worth of digital assets in total.
This might be related to the fact that more cryptocurrencies were stolen from such protocols than any other type of platforms last year. On the other hand, scammers send most of their funds to addresses at centralized exchanges.
The Darknet market, terrorism financing, and ransomware were among the other leading forms of crimes in 2021. Similar to scammers, criminals operating in those sectors sent the majority of their funds to wallets at centralized trading venues.
It is worth noting that due to regulations like the Travel Rule, digital asset businesses in many nations had to conduct additional compliance checks and reporting to transactions exceeding $1,000 in value. Unsurprisingly, illegal addresses send a disproportionate number of transfers to exchanges just under that $1K threshold.
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