Chainalysis, a blockchain-based data platform, estimated that there would be $8.6 Billion in cryptocurrency laundering by 2021. This is 30% more than 2020. However, the company claims that such an increase can be expected considering the substantial growth in cryptocurrency assets over the past year.
Crypto Money-Laundering is on the Rise
Chainalysis’s most recent report stated that cybercriminals who deal with cryptocurrency have one goal: to move their “ill-gotten money to a service where it can be kept safe and converted to cash.”
The company also noted that illegal transactions involving bitcoins and altcoins have increased in line with the industry’s rapid expansion in 2021. In 2020, $6.6 billion was stolen by criminals from digital assets. This number will rise to $8.6 trillion in 2021.
Money-laundering chart, Source: Chainalysis
Nearly 17% were transferred to Decentralized Finance applications from 2% in 2020. According to the report, mining pools, high risk exchanges and mixers saw significant value growth 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 difficult to quantify how much fiat currency is converted from off-line crime, such as traditional drug trafficking, into cryptocurrency that can be laundered. The company stated that they have anecdotal evidence that this is occurring.
Crypto-Based Crimes for 2021
In the last year, the most common type of cryptocurrency crime was theft and scams. Nearly half of the stolen funds from wallets were sent to DeFi applications by thieves – that’s more than $750 millions worth of digital assets.
This could be due to the fact that more cryptocurrency was stolen from these protocols last year than any other platform. Scammers, on the other hand send most of their money to addresses at centralized platforms.
Ransomware, terrorist financing, and Darknet were some of the most prominent forms of crime in 2021. Criminals in these sectors, like scammers, sent large amounts of their money to wallets at central trading venues.
Noting that regulations such as the Travel Rule required digital asset businesses to perform additional compliance checks and report on transactions exceeding $1,000, it is important to note. It is not surprising that illegal addresses send an excessive number of transfers to exchanges below the $1K threshold.
Marla Brooks – Financial Analysis
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