Centralized exchanges remain primary for laundering, but DeFi and cross-chain bridges see increased usage. Decrease in total value sent to laundering services noted amidst evolving tactics of criminal groups.
Decentralized exchanges remain a predominant avenue for illicit money flows, although there has been a slight shift towards DeFi platforms and online gambling services, as highlighted in a recent blog post dated February 15 by Chainalysis, a company specializing in on-chain security.
Nevertheless, there has been a notable increase in the utilization of cross-chain bridges for the purpose of money laundering, particularly among addresses associated with theft. This trend, identified by the report, illustrates a common strategy among crypto thieves to transfer funds across various blockchains, thereby obfuscating their origin and effectively laundering money.
The surge in the use of cross-chain bridges is attributed to the expansion of decentralized finance (DeFi) throughout 2023. However, it is noted that the inherent transparency of DeFi protocols generally makes them less suitable for concealing the movement of funds.
According to the analysis, there has been a decline in the total value of cryptocurrency routed through laundering services, decreasing from $31.5 billion in 2022 to $22.2 billion in the past year. This decrease exceeds the overall reduction in crypto transactions, indicating a significant downturn in laundering activities.
Furthermore, the report indicates a less concentrated pattern of laundering at the level of individual deposit addresses in 2023, despite a slight increase in concentration at the service level. This suggests a potential strategy adopted by criminals to disperse their activities across multiple addresses and services in order to evade detection and law enforcement efforts.
The report also sheds light on the evolving tactics of sophisticated criminal organizations, such as the Lazarus Group, which have begun to utilize a broader range of crypto services and protocols. In the aftermath of the takedown of the mixer Sinbad, YoMix has emerged as a prominent tool for laundering, with its adoption by hackers affiliated with North Korea contributing significantly to its growth.
Overall, Chainalysis concludes that money launderers demonstrate adaptability and sophistication within the crypto space, thereby engaging law enforcement agencies in a continuous 'cat and mouse' pursuit.