Money laundering in crypto continued to rise between 2020 and 2021, although the illicit activity still remains below its all-time high from 2019. However, the takedown of two major illegal services in the past year may have made the activity less concentrated, blockchain intelligence firm Chainalysis said in a new report.
Overall, Chainalysis said that USD 8.6bn worth of cryptoassets was laundered in 2021, a 30% increase from USD 6.6bn the year before.
The increase is “unsurprising” given the growth of crypto in general over the year, Chainalysis said, noting that the number only includes what it called “cryptocurrency-native crime,” and not "traditional" crime where fiat currency was later converted to crypto.
DeFi protocols received 17% of all funds sent from illicit wallets in 2021, up from 2% the previous year, the researchers said. According to them, that translates to a 1,964% year-over-year increase in total value received by DeFi protocols from illicit addresses, reaching a total of USD 900m in 2021.
Also, mining pools, high-risk exchanges, and mixers also saw substantial increases in value received from illicit addresses as well.
But while the amount of money laundered through crypto increased over the year, Chainalysis also said that the activity is “heavily concentrated” around a small number of services, with many of them appearing to be “purpose-built for money laundering.”
58% of all funds sent from illicit addresses moved to five services last year, compared to 54% in 2020, per their data.
“Law enforcement can strike a huge blow against cryptocurrency-based crime and significantly hamper criminals’ ability to access their digital assets by disrupting these services,” the firm suggested, reminding about Suex and
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