According to a recent report from Chainalysis, the laundering of money through cryptocurrency exchanges saw a significant drop of 29% in 2023.
This revelation, disclosed on Thursday, highlighted a decrease of approximately $9.3 billion, plummeting from $31.5 billion in 2022 to $22.2 billion in 2023.
The blockchain research firm attributed this decline to an overall reduction in crypto transaction volume, encompassing both lawful and unlawful transactions. “The role of illicit services has diminished over time, with a notable increase in illicit funds directed towards decentralized finance (DeFi) protocols,” stated the report.
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“DeFi’s transparency makes it an unattractive option for concealing the movement of funds,” Chainalysis explained. Centralized exchanges remained a significant destination for funds from illicit sources, a trend consistent over the past five years.
The breakdown of service types used for money laundering in 2023 closely resembled that of 2022, with a minor decrease in illicit funds directed toward illicit services and a rise in funds directed toward gambling services and bridge protocols.
In specific areas of crypto criminal activity, notable changes were observed. Chainalysis reported a substantial increase in the volume of funds directed to cross-chain bridges from addresses associated with stolen funds.
Additionally, there was a notable surge in funds from ransomware wallets being channeled to gambling platforms and bridges.
The report further highlighted that 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each in 2023, collectively accumulating $3.4 billion.
This indicated a considerable concentration of illicit funds, although an increase from 2022, where only 40 addresses received over $10 million in illicit crypto, totaling just under $2.0 billion.
The trends outlined in the report underscore the evolving landscape of cryptocurrency laundering and the challenges faced by authorities in combating financial crimes in the digital realm.