Cybercriminals laundered $8.6bn (£6.4bn) worth of cryptocurrency last year, a 30% increase compared to the previous year, new data has shown.
According to Chainalysis, fraudsters have taken more than $33bn worth of crypto since 2017, with most of the total over time moving to centralised exchanges.
The research analysed the amount of crypto sent from illicit addresses to addresses hosted by services.
“If there’s no way to access the funds, there’s no incentive to commit crimes involving cryptocurrency in the first place,” the report said. “That’s why money laundering underpins all other forms of cryptocurrency-based crime.”
Despite this, money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021. This compares to between $800bn and $2tn of fiat currency laundered each year, which makes up as much as 5% of global GDP, according to the UN Office of Drugs and Crime.
“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,” it said.
The report added that decentralised finance (DeFi) is now starting to play a bigger role in money laundering, with decentralised protocols receiving 17% of all funds sent from illicit wallets in 2021, up from a marginal 2% the previous year.
This translates to a 1,964% 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.
It also highlighted a difference between theft and scamming. Addresses associated with theft sent just under half of 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 a lot.
Scammers, on the other hand, sent the majority of their funds to addresses at centralised exchanges.