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Crypto Money Laundering Tactics Evolve as Criminals Spread Activity Across More Addresses

A new report by Chainalysis reveals that crypto money laundering tactics have shifted in 2023, with criminals diversifying their activity across more deposit addresses to evade detection. The report also highlights the increasing use of sophisticated on-chain laundering techniques, such as bridges and mixers.

Key Findings

  • In 2023, 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each, collectively totaling $3.4 billion.
  • This represents a significant concentration, but a decrease from 2022, when just 40 addresses received over $10 million worth of illicit crypto.

Money Laundering Tactics by Criminal Type

  • CSAM vendors and ransomware operators show a high degree of concentration, with just seven deposit addresses accounting for 51% of all value received from CSAM vendors, while nine addresses account for 50.3% of all value received from ransomware.
  • Scams and darknet markets display less concentration, indicating that criminals may be using more nested services or deposit addresses to conceal their activity.

Sophisticated Crypto Criminals’ Money Laundering Strategies

  • The report identifies two key ways sophisticated crypto criminals have adjusted their money laundering strategy: the use of new mixers and cross-chain bridges.
  • YoMix, a Bitcoin-based mixer, has emerged as a replacement for Sinbad, which was shut down by law enforcement in November 2023. YoMix saw significant growth in 2023, with inflows growing by over 5x throughout the year.
  • Cross-chain bridges have also seen increased use, particularly among crypto thieves. In 2023, bridge protocols received $743.8 million in crypto from illicit addresses, a significant increase from $312.2 million in 2022.

Conclusion

The report concludes that law enforcement and compliance teams must adapt to these new laundering methods by studying on-chain patterns associated with them. The increasing sophistication of crypto criminals highlights the need for greater diligence and understanding of interconnectedness through on-chain activity.

Disclaimer

This material is for informational purposes only, and is not intended to provide legal, tax, financial, or investment advice. Recipients should consult their own advisors before making these types of decisions.