For many years, the The crypto economy is rife with black market sales, theft, ransomware, and money laundering—despite the odd fact that in that economy practically every transaction is recorded in the ledger. the permanent, immutable part of the blockchain. But new evidence suggests that years of progress in blockchain tracing and cracking down on that illicit underworld could work—if not reducing the total volume of crime, then at least cutting it. reduced the number of money laundering facilities, leaving the cryptocurrency black market with fewer options for withdrawing proceeds than it had in a decade.
in one part of its annual crime report With a focus on money laundering announced today, crypto-tracking firm Chainalysis points to a new consolidation in crypto-criminal cash-out services over the past year. It counted just 915 of those services in use in 2022, the lowest level since 2012 and the latest sign of a dwindling number of those services since 2018. Bitcoins take actual dollars, euros, and yen: It was found that just five crypto exchanges currently process almost 68% of all black market withdrawals.
In fact, Chainalysis only saw 542 crypto deposit addresses receive more than half of the $6.3 billion in total illicit funds it tracks for those withdrawals by 2022, and only four address received $1.1 billion in that amount.
Kim Grauer, research director at Chainalysis, said the drastic narrowing of so-called “shortcuts” for crypto crime is the result of the government’s ongoing crackdown on money laundering with cryptocurrency and is a sign of additional enforcement. “It is shocking to see some of these deposit addresses transferring over a hundred million dollars in illicit funds and still functioning when it is something that is extremely transparent and easily discernible by blockchain analytics,” Grauer said. . “So it seems like a good bottleneck where we can shut down and profile and – to some extent – remove this activity.”
Meanwhile, whether the total number of crypto crimes will increase or decrease in 2022 remains unclear: By some measures, Chainalysis data has shown that Crime of using cryptocurrencies on the rise last year despite a sharp drop in the cryptocurrency exchange rate. But those numbers include a spike in illegal transactions at sanctioned crypto exchanges — which may have less to do with the increase in crime than it does with the Office of the Comptroller. The US Treasury Department’s Foreign Assets Assets (OFAC) is increasingly imposing such sanctions on major players in the crypto underworld. For example, last April, OFAC Garantex is sanctioned, a Russia-based exchange said to have laundered more than $100 million in proceeds of crime, including ransomware payments. Last year, it sanctioned two other Russian exchanges, Chatex and Suex, has stopped working. And just last week, OFAC sanctioned another exchange, Bitzlato and the Department of Justice prosecute the Russian founder, Anatoly Legkodymov, and cancel his offline activity.
“You can’t do a ransomware attack if there’s no way to convert that ransom into something usable,” Grauer said. “What we really see OFAC doing, and what we really emphasize, is that the money laundering ramps are facilitating crime. And I think the ongoing crackdown has shown that people understand that they are at a point where they can meaningfully intervene.”
