Just over $22bn worth of cryptocurrency was laundered in 2023, a 30% drop from the previous year, with nefarious actors switching techniques to stay hidden from investigators, according to Chainalysis.
The blockchain analysis company claimed in a new report that some of the decline in crypto-money laundering could be explained by an overall decrease in crypto-transaction volumes during the same period. However, this figure was only 15%.
The firm noted that centralized exchanges remain the main destination for funds sent from illicit addresses, as they have for the past five years. The share of funds going to DeFi protocols has grown as they have become more popular overall, although their inherent transparency makes them a poor choice for money laundering, the report added.
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Where Chainalysis did see a major change in tactics was the increased use of a new mixer, YoMix, following the takedown of Sinbad. It’s likely that the North Korean Lazarus Group is using this Bitcoin mixer to launder funds, with inflows growing more than five-fold in 2023, the report noted.
Overall, however, the total value of unlawful funds moving to mixers virtually halved, from $1bn in 2022 to just $504m last year.
Chainalysis also saw a major uptick in the use of cross-chain bridges, which allow users to move funds from one blockchain to another. Overall, bridge protocols received $744m in crypto from illicit addresses in 2023, up from $312m in 2022.
However, the good news is that blockchain analysts can trace these funds, Chainalysis said.
“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.”