According to Chainalysis, money laundering in the crypto space surged from $6.6 billion in 2020 to $8.6 billion in 2021. The blockchain forensics firm also pointed out that the role of decentralized finance (DeFi) in crypto money laundering skyrocketed in 2021. Chainalysis asserted that this occurred alongside the growth of the overall market, although BTC still facilitated most online crypto scams.
Chainalysis’ head of research, Kim Grauer, in a media session, explained that DeFi had become a breeding ground for criminal activity. In Grauer’s own words:
“Undeniably the theme this year is the way that DeFi has become a space for criminals.”
However, Grauer also pointed out that much of the DeFi-originated crime was from hacks, and miscreants still favored BTC. This is especially so when it comes to laundering external money.
Grauer also touched on the relative conservativeness of the given dataset, “just 0.05% of all crypto transaction volume in 2021.” This is because many of the alleged crimes, especially regarding money laundering, were still under investigation.
Of the compromised wallet addresses used to facilitate these crypto shenanigans, the majority were centralized exchanges with subpar KYC policies. Nonetheless, there was also a noted upswing among decentralized platforms – as high as 2000%, in value received from illegal addresses.
To date, according to Chainalysis, a considerable chunk of illicit funds still revolves around just five major centralized crypto exchanges. However, the forensics platform refrained from naming them in its latest report.
