According to Chainalysis’ report on money laundering trends, the value of crypto transferred by illicit addresses in 2023 fell by nearly $10 billion from $31.5 billion to the latest $22 billion. The report attributes the drop to the overall decline in both legitimate and illicit crypto transaction volumes in 2023. An analysis of services used by bad actors shows a significant increase in the value of funds directed towards gambling services and bridge protocols.
Chainalysis Report: Crypto Value Sent From Illicit Addresses Dropped by Nearly $10 Billion in 2023
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Increase in the Portion of Illicit Funds Transferred to Gambling Services
In 2023, illicit addresses transferred cryptocurrencies valued at $22 billion or nearly $10 billion less than the $31.5 billion transferred in 2022, the latest Chainalysis report on money laundering trends details. The report attributes this drop to the overall decline in both legitimate and illicit crypto transaction volumes in 2023.
However, the Chainalysis data indicates that the drop in crypto transaction volume associated with money laundering (29.5%) was more pronounced than the overall volume decrease (14.9%). The data also indicates an increase in the proportion of illicit funds directed towards decentralized finance ( defi) protocols.
While some may interpret this to mean that bad actors increasingly favor laundering funds through defi protocols, the blockchain analysis and intelligence firm asserts that the inherent transparency of defi means it is unwise for criminals to use these to obfuscate the movement of funds.
Meanwhile, a breakdown of the tools and services exploited by bad actors shows a slight decrease in the proportion of illicit funds channelled to illicit service types. However, this breakdown also reveals a significant increase in the value of funds directed towards gambling services and bridge protocols.
Criminals Primarily Use Five Fiat off-Ramping Services
Regarding the use of fiat off-ramping services by criminals, data from Chainalysis suggests that criminals primarily utilize five such services.
“While there are thousands of off-ramping services in operation, most money laundering activity is concentrated on a select few services. Of all illicit funds sent to off-ramping services in 2023, 71.7% went to just five services, up slightly from 68.7% in 2022” the report stated.
In terms of the tactics employed by criminals to launder money, the Chainalysis report indicated that more sophisticated cybercriminal groups, such as the Lazarus Group, seem to prefer bridges and mixers. To substantiate this claim, the data revealed that bridge protocols received $743.8 million in cryptocurrency from illicit addresses in 2023. This figure is more than double the $312.2 million received in 2022.
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