The Chainalysis report detailed how cybercriminals laundered their cryptocurrencies in 2021 compared to the year before, with DeFi protocols being used the most.
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A new report by Chainalysis has revealed that $8.6 billion in value was laundered through crypto in 2021. It marks a 25% increase from 2020, but still far below the level. High watermark achieved in 2019.
That year $10.9 billion worth of cryptocurrency was laundered. Since 2017, Chainalysis estimates that a total of $33.4 billion in cryptocurrencies has been laundered.
Chainalysis points out that $33.4 billion in crypto laundered since 2017 pales in comparison to the estimated $2 trillion in fiat money laundered annually from offline crimes like drug trafficking. However, a reliable assessment of the amount of fiat money being laundered is more difficult to determine than cryptocurrencies due to the untraceable use of cash in offline crimes. The report states:
“The biggest difference between fiat and crypto-based money laundering is that due to the inherent transparency of blockchains, we can easily track how criminals move crypto between wallets and services. in an attempt to convert their money into cash.”
According to the cybersecurity analytics provider, the value of laundered crypto is derived from “crypto crime,” where “profits are almost always derived from crypto, not fiat.” .”
For the first time since 2018, centralized exchanges (CEX) accounted for less than half (47%) of the laundered value, signaling a potential shift in the behavior of cybercriminals. DeFi protocols see their utility for illegitimate addresses grow by nearly 2,000% from a 2% market share in 2020 to 17% in 2021.
Hackers, such as the infamous North Koreans who stole around $400 million, favor DeFi while scammers tend to prefer CEX, which Chainalysis considers “relatively unsophisticated. “.
“Mining pools, high-risk exchanges, and mixers have also seen a significant increase in value received from illicit addresses,” said Chainalysis.
Of the funds laundered in 2021, a larger proportion are in the top five washes in 2021 (58%) than in 2020 (54%). However, the overall concentration of money laundering decreased in 2021 when there were 583 addresses receiving deposits worth at least USD 1 million while in 2020, 270 such addresses were used. .
Related: Overall impact of crypto crime set to decrease further in 2022: Chainalysis
By content, altcoins show the greatest concentration as 68% of them are laundered to the 20 largest deposit addresses used for illicit activity. Ethereum (ETH) is next with 63%, stablecoins at 57%, and Bitcoin (BTC) by far the least centralized with only 19% moving to the top addresses.