Cybercriminals Laundered $8.6 Billion Worth of Crypto in 2021: Report

Money laundering in the crypto sector grew from $6.6 billion (roughly Rs. 49,600 crore) to $8.6 billion (roughly Rs. 64,640 crore) between 2020 and 2021, as per a yearly study conducted by blockchain forensics firm Chainalysis. This year’s report summary shows that while the total amount of money laundered increased by 30 percent, only a fraction of all transactions came from illicit activities. Despite being a relatively high year-on-year percentage increase, the figure still has a wide gap compared to 2019.

As per Chainalysis’ most recent study, the most common source of illicit funding remained pretty standard frauds focused on collecting cryptocurrency. In comparison, in its 2019 report, Chainalysis said that about $10.9 billion (roughly Rs. 81,945 crore) in crypto were laundered in the sector. The record-keeping company also announced that the figures have hit above $30 billion (roughly Rs. 2,25,570 crore) over a five-year duration.

The company mentions that these figures are minuscule compared to what is being laundered in the physical sector. Chainalysis says that about $2 trillion (roughly Rs. 1,50,36,360 crore) gets laundered every year from illicit activities like drug trafficking. However, the report states that the amount is an estimate as physical cash has a direct paper trail that one can follow to monitor movements, unlike crypto.

The Chainalysis report also highlights the drop in money laundering through centralised exchanges, representing just 47 percent of the entire figure. This is the first time since 2018 that the figure will be this low. However, the decentralised finance (DeFi) sector has seen its usage for laundering hit a new high after reaching a massive 17 percent from 2 percent in 2020.

Chainalysis mentioned that the behaviour shows that high-grade hackers like the Lazarus group have now moved to DeFi while petty scammers are still using centralised exchanges. Grouping by assets, the Chainalysis report mentioned that altcoins were top in the list, with about 68 percent of laundered funds entering into diverse wallets.

Money laundering is also concentrated to a small number of services and a small number of deposit addresses, according to Chainalysis. The company found that 58 percent of all funds sent from illicit addresses moved to five services last year, compared to 54 percent in 2020.

Just 583 deposit addresses received 54 percent of all funds sent from illicit addresses in 2021, the researchers found, and each of those 583 addresses received at least $1 million (roughly Rs. 7.5 crore) from illicit addresses. In total, they received just under $2.5 billion (roughly Rs. 18,800 crore) worth of cryptocurrency.