Crypto Money Laundering Dropped Almost 30% in 2023: Chainalysis
Illicit cryptocurrency transactions fell roughly 30% in 2023, according to Chainalysis’ newly released 2024 Crypto Crime Report. This decrease signals a major shift in crypto money laundering trends.
The report also stated that total funds sent between illicit addresses dropped by 14.9% as well.
Crypto Money Laundering Trends: Why the Big Drop?
According to Chainalysis, the shrinking numbers can be attributed to an overall reduction in total cryptocurrency transaction volume as well as efforts by bad actors to conceal illicit activity.
Our latest Crypto Crime preview is out now! This time, we’re covering the latest trend in crypto money laundering. https://t.co/JgToScujjr
— Chainalysis (@chainalysis) February 15, 2024
Additionally, despite this overall decrease, illicit funds channeled into DeFi protocols have increased.
“We attribute this primarily to the overall growth of DeFi generally during the time period, but must also note that DeFi’s inherent transparency generally makes it a poor choice for obfuscating the movement of funds,” the report stated.
Lazarus Group’s Mixer Maneuvers
Chainalysis’ Crypto Crime Report further highlighted that funds sent to mixers from illicit addresses decreased by nearly half a billion dollars last year “likely due to law enforcement and regulatory efforts.”
The blockchain data firm’s latest statistics follow the November 2023 sanctioning of Sinbad, a crypto mixer utilized by North Korean state-sponsored hacking group Lazarus Group, by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
The report notes that YoMix has taken over Sinbad’s role in supporting North Korea-affiliated hackers, with the crypto mixer experiencing “inflows growing by more than 5x” throughout 2023.
Chainalysis Warns Of Bad Actors
Correspondingly, the report found that “money laundering actually became less concentrated at the deposit address level in 2023,” suggesting that crypto criminals are spreading their funds across addresses “in order to better conceal it from law enforcement and exchange compliance teams.”
The new tactic “may be a strategy to lessen the impact of any one deposit address being frozen for suspicious activity” and may require those fighting crypto criminals to possess “greater diligence” and “understanding of interconnectedness through on-chain activity than in the past.”
“The changes in money laundering strategy we’ve seen from crypto criminals like Lazarus Group serve as an important reminder that the most sophisticated illicit actors are always adapting their money laundering strategy and exploiting new kinds of crypto services,” the report concluded. “Law enforcement and compliance teams can be more effective by studying these new laundering methods and becoming familiar with the on-chain patterns associated with them.”
