Chainalysis and Crypto Crime Report: the chapter on money laundering

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Chainalysis, the on-chain analysis platform, has released the chapter of the Crypto Crime Report dedicated to money laundering. According to what emerged, it seems that in 2023 criminals have laundered $22.3 billion, almost 30% less than in 2022. 

Chainalysis and Crypto Crime Report: money laundering reached $22.3 billion in 2023

Chainalysis has published the money laundering chapter of its Crypto Crime Report 2023.

From what has emerged, it seems that last year 22.3 billion dollars were recycled, almost 30% less than in 2022. 

The blockchain platform highlights that this downward trend can be partly attributed to the overall decrease in the volume of both legitimate and illicit crypto transactions. 

The fact remains, however, that the decline in money laundering activities has been more pronounced. This is a -29.5% decrease in money laundering transactions, compared to a 14.9% decrease in the total volume of transactions. 

In addition, Chainalysis states that overall, centralized crypto-exchanges remain the main destination for funds sent from illicit addresses with 62%

However, the share of illicit funds allocated to DeFi protocols seems to be growing, reaching 13% in 2023.

Chainalysis on money laundering: crypto criminals diversify their activity

In addition to diversifying money laundering activities across multiple services to better conceal them, crypto criminals also appear to be using new tactics. 

And indeed, in the Chainalysis report it is highlighted that overall crypto criminals distribute their activity across multiple addresses belonging to intermediaries or wallets or, furthermore, fiat off-ramping services (such as centralized crypto exchanges).

This happens because with centralized crypto services, companies like Tether (USDT) or Circle (USDC) or CEX can directly intervene and freeze funds. On the other hand, with DeFi protocols, criminal activities can be traced and law enforcement can intervene directly. 

Not only that, crypto criminals are also changing their tactics and strategies, using bridges and mixers more often for money laundering.

For example, well-known North Korean cyber criminals associated with hacker groups like Lazarus Group, tend to use a wider variety of crypto services and protocols.

Not surprisingly, overall, bridge protocols received 743.8 million dollars in cryptocurrencies from illicit addresses in 2023, compared to 312.2 million dollars in 2022. 

Regarding the use of mixers, it seems that after Tornado Cash, hackers affiliated with North Korea preferred the Sinbad mixer in 2022, while YoMix emerged in 2023. Overall, YoMix experienced tremendous growth in 2023, with a more than 5-fold increase in inflows throughout the year.

The explosive growth of “Approval Phishing”

The preview of the Chainalysis Report, published in December 2023, highlights the explosive growth of Approval Phishing.

Only in 2023, in fact, it seems that 374.6 million dollars were stolen through this crypto scam technique, which is part of the “romantic scams”. 

And indeed, with phishing approval, scammers trick the user into signing a malicious blockchain transaction

This user’s signature gives the scammer’s address approval to spend specific tokens within their wallet, allowing them to empty the victim’s address of those tokens at their discretion. 

The strong growth of approval phishing could be due to the increase in decentralized applications (dApps) that require approval signatures, to authorize smart contracts.