Criminals Adapting Money Laundering Tactics: New Mixer and Bridge Protocols Emerge
A recent analysis by Chainalysis has revealed a shift in the way criminals are laundering cryptocurrency, with sophisticated actors utilizing new services and protocols to evade detection.
Concentration of Illicit Activity Shifts
According to the report, the number of deposit addresses receiving over $1 million in illicit cryptocurrency decreased from 542 in 2022 to 1,425 in 2023. While this may indicate a decrease in concentration at the individual address level, the analysis found that money laundering activity is becoming more concentrated at the service level.
New Developments in Criminal Tactics
The report highlights two key developments in criminal tactics:
- YoMix: A New Mixer Emerges
- YoMix, which was used by North Korea-affiliated hackers to launder cryptocurrency, saw significant growth in 2023, with inflows increasing by over 5x.
- The service replaced Sinbad, a popular mixer that was shut down by law enforcement last year.
- Cross-Chain Bridges Gain Popularity
- Cross-chain bridges, which allow users to move funds between different blockchains, have also become increasingly popular among criminals.
- In 2023, bridge protocols received $743.8 million in crypto from illicit addresses, up from just $312.2 million in 2022.
Implications for Law Enforcement and Compliance
The analysis notes that these developments highlight the need for law enforcement and compliance teams to stay ahead of evolving money laundering tactics.
“Sophisticated bad actors are always adapting their strategy and exploiting new kinds of crypto services,” said a Chainalysis spokesperson. “It’s crucial that we study these new laundering methods and become familiar with the on-chain patterns associated with them.”
Key Findings
- The number of deposit addresses receiving over $1 million in illicit cryptocurrency decreased from 542 in 2022 to 1,425 in 2023.
- YoMix, a new mixer, saw significant growth in 2023, with inflows increasing by over 5x.
- Cross-chain bridges received $743.8 million in crypto from illicit addresses in 2023, up from just $312.2 million in 2022.
- Certain types of criminal activity, such as CSAM vendors and ransomware operators, continue to exhibit high concentrations at the deposit address level.
What It Means
The shift towards more concentrated money laundering activity at the service level highlights the need for law enforcement and compliance teams to adapt their strategies to stay ahead of evolving tactics. The emergence of new services like YoMix and bridge protocols also underscores the importance of staying informed about on-chain patterns and criminal behavior.