Money laundering made 0.05% of all crypto transactions in 2021

By Raffaele Redi
• Updated

Blockchain’s transparency would prevent criminal activities, say researchers

Close-up of George Washington’s image on US dollar banknote with golden bitcoin cryptocurrency coin on top of it                                 
The UN estimated that between $800bn and $2trn of fiat currency is laundered each year, as much as 5% of global GDP – Photo: Shutterstock
                                

Money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021 according to Chainalysis research, amounting to $8.6bn worth of cryptocurrency in 2021 and $33bn since 2017.

However, the amount of cryptocurrency sent from illicit addresses to addresses hosted by legal services represented a 30% increase in money laundering activity over 2020.

“Such an increase is unsurprising given the significant growth of both legitimate and illicit cryptocurrency activity in 2021,” said researchers.

By comparison, according to Chainalysis research, the UN Office of Drugs and Crime estimated that between $800bn and $2trn of fiat currency is laundered each year – as much as 5% of global GDP.

“The biggest difference between fiat and cryptocurrency-based money laundering is that, due to the inherent transparency of blockchains, we can more easily trace how criminals move cryptocurrency between wallets and services in their efforts to convert their funds into cash,” added researchers.

DeFi use increased

According to researchers, for the first time since 2018, centralised exchanges took in 47% of funds laundered, with DeFi protocols receiving 17% of all funds sent from illicit wallets in 2021 – up from 2% the previous year.

That translates to a 20-fold year-over-year increase in total value received by DeFi protocols from illicit addresses, reaching a total of $900m in 2021.

Mining pools, high-risk exchanges and mixers also saw substantial increases in value received from illicit addresses as well, said researchers.

Theft and scammers

Moreover, addresses associated with theft sent just under half their stolen funds to DeFi platforms, more than $750m worth of cryptocurrency in total.

North Korea-affiliated hackers in particular, who were responsible for $400m worth of cryptocurrency hacks last year, used DeFi protocols for money laundering quite a bit,” said researchers.

On the other hand, scammers send most of their funds to addresses at centralised exchanges.

“This may reflect scammers’ relative lack of sophistication. Hacking cryptocurrency platforms to steal funds takes more technical expertise than carrying out most scams,” said researchers.  

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image