Cryptocurrency has brought a new channel of money laundering, which is different from the traditional ones used to hide the sources of illegal income. According to the latest report from Chainalysis, the aim of money laundering is to make it difficult for criminals to access and spend their profits. In response, criminals like the Lazarus Group are adjusting their methods to exploit crypto services effectively.
In the world of digital currency, most attention is directed at sending money to convert it into hard cash and usually takes steps that would make it difficult to trace the transfer. Attention shifts to intermediaries such as personal wallets, mixers, decentralized finance protocols (DeFi), and fiat off-ramping services such as centralized exchanges. Unlike DeFi, which cannot freeze assets deemed as suspicious but can easily track transactions.
Trends in Crypto Money Laundering
Key trends in 2023 show the reduction of volume of the illegally transacted cryptocurrency to services, heading to the growth of DeFi protocols. Very similar to 2022, the trend is very high on moving funds to gambling services and bridge protocols. But digging deeper, what’s unearthed is a change in the genre of criminal activities that transpire, such as the rising number of cross-chain bridges being used for conducting fraudulent schemes by cybercriminals.
Cash-out of the crypto assets into fiat continues to be centralized into fiat off-ramping services, and some services show an increased concentration of money laundering activity. While several services have experienced increased concentration at the deposit address level, overall concentration has decreased, which may represent a diversification in the laundering method among criminals.
Some of the more sophisticated criminals, such as the Lazarus Group, are increasingly using a range of crypto services and protocols to launder their funds. As popular mixers like Sinbad close shop, they are quickly replaced by other services, such as YoMix. Growth in Illicit activity is very evident among cyber thieves who continue to leverage cross-chain bridges that facilitate movement between different blockchain networks.
In 2023, bridge protocols received a huge amount of illicit flows through them, and some of this, notably, North Korea-affiliated hackers directed through. Analysis shows an intricate laundering tactic includes fund transfers across multiple blockchains to obfuscate detection.
Nevertheless, the urgency for taking some serious and proactive steps on the part of law enforcement agencies and the crypto platforms to put a lid on the misuse is all the more infused because of the adaptability of criminals to new services and protocols.
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