55% of illicit crypto funds are laundered through just five cryptocurrency services, according to a Chainalysis 2021 Crypto Crime Report. Apparently, they are also laundered using approximately 270 unique blockchain deposit addresses. Most of the cryptocurrencies are acquired through scams or ransomware used in darknet markets. Largest Processors of Illicit Funds Receives More than $25M Annually Chainalysis in its latest report highlighted that 1,867 addresses received 75% of all criminally-linked cryptocurrency funds in 2020, worth around $1.7 billion. Chainalysis pointed out nested services such as itBit nested at Paxos and Changelly, nested at HitBTC, as significant sources of money laundering exchange activity. These third-party services tap into the crypto exchange’s trading pairs and liquidity as they hide the illicit activity within the overall pool of transactions from the parent exchange. The report further emphasized that the largest processors of illicit funds received more than $25 million annually that are mainly serving criminal clients. Apparently, they would also be unlikely to stay in business without them. Hence, identifying and prosecuting the owners of these deposit addresses could take away much of the larger share of money launderers. The report read: “We believe the growing concentration of deposit addresses receiving illicit cryptocurrency reflects cybercriminals’ increasing reliance on a small group of OTC (over-the-counter) brokers and other nested services specializing in money laundering.” Illegal Activity Still Far Greater in Fiat Currency Chainalysis works with crypto exchanges and law enforcement agencies to identify addresses of crypto wallets to track funds as they move through multiple wallets or exchanges to their final deposit addresses. Meanwhile, those addresses also help in identifying other depositors, allowing researchers to get an overall mapping of the crypto money laundering. Meanwhile, illegal activity is still far greater in fiat currency, where an estimated $2 trillion is laundered through traditional means compared to just $2 billion via cryptocurrencies, according to Ciphertrace.
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