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Crypto money laundering experienced a significant decline of nearly 30% in 2023, as indicated by Chainalysis’ recently published 2024 Crypto Crime Report.
The report also noted that the total amount of funds transferred between illicit addresses fell by 14.9%.
Chainalysis attributes these decreasing figures to an overall decline in total cryptocurrency transaction volume, along with efforts by malicious actors to obscure illegal activities.
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
Moreover, despite the overall reduction in the involvement of illicit services, the volume of illicit funds directed towards DeFi protocols has risen.
“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.
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Chainalysis’ Crypto Crime Report further emphasized that funds transferred 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 used by the North Korean state-sponsored hacking group Lazarus Group, by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
The report highlights that YoMix has assumed Sinbad’s role in aiding North Korea-affiliated hackers, with the crypto mixer witnessing “inflows growing by more than 5x” throughout 2023.
Chainalysis Warns Of Bad Actors Evading Detection With New Strategy
In addition, the report discovered that “money laundering actually became less concentrated at the deposit address level in 2023,” indicating that crypto criminals are dispersing their funds across multiple addresses “to better conceal it from law enforcement and exchange compliance teams.”
This new approach “may be a strategy to lessen the impact of any one deposit address being frozen for suspicious activity” and may necessitate that those combating crypto criminals 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.”
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