Most criminal cryptocurrencies go through just 5 exchanges

10 months ago

For many years The cryptocurrency economy is rife with black market sales, theft, ransomware, and money laundering, despite the bizarre fact that in this economy virtually every transaction is recorded on a permanent, immutable blockchain ledger. But new evidence suggests that years of progress in tracing the blockchain and prosecuting this illicit underworld could be having an effect – if not reducing the overall volume of crime, then at least reducing the number of money laundering outlets, leaving the cryptocurrency black market with fewer opportunities to cash out. their income than in a decade.

As part of its annual money laundering crime report released today, cryptocurrency tracking company Chainalysis points to a new consolidation of cryptocurrency cashout services over the past year. In 2022, there were just 915 such services, the fewest since 2012 and the latest sign of a steady decline in the number of these services since 2018. Chainalysis says even fewer exchanges now allow money laundering. Cryptocurrency trading for real dollars, euros and yen: Only five cryptocurrency exchanges were found to currently process nearly 68 percent of all black market payouts.

In fact, Chainalysis found that only 542 cryptocurrency deposit addresses received more than half of the total $6.3 billion in illicit funds it tracked to these cash out services in 2022, and only four addresses received $1.1 billion of these funds.

According to Kim Grauer, director of research at Chainalysis, this intense narrowing of the so-called “descents” for crypto crime is the result of the government’s ongoing crackdown on crypto money laundering and a sign of more law enforcement to come. “It’s shocking to see some of these deposit addresses transfer over $100 million worth of illegal funds and still operate, even though it’s something extremely transparent and easily viewable with blockchain analytics,” says Grauer. “So this seems like a good entry point where we can shut down and profile and – to some extent – ​​eradicate this activity.”

In the meantime, it is far from clear whether the total number of crypto crimes has risen or fallen in 2022: for some indicators, Chainalysis data showed that the criminal use of cryptocurrencies has increased last year, despite a sharp drop in cryptocurrency rates. But these numbers include a huge spike in illegal transactions on sanctioned cryptocurrency exchanges, which may be due less to rising crime than to the fact that the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is increasingly imposing these sanctions on major players in the crypto underground. . . For example, last April OFAC Sanctioned by Garantex, a Russian-based exchange that it says laundered more than $100 million in criminal proceeds, including ransomware payments. A year earlier, he sanctioned two other Russian exchanges, Chatex and Suexwhich have since gone out of business. And just last week, OFAC authorized another exchange, Bitzlato, and the Justice Department charged its Russian founder Anatoly Legkodymov and shut down his activities.

“You don’t launch a ransomware attack unless there’s a way to turn that ransom into something useful,” says Grauer. “We actually see what OFAC is doing and what we’re really highlighting is that money laundering contributes to crime. And I think the ongoing crackdown has shown that people understand that they are at a point where there can be meaningful intervention.”

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