over the years, The cryptocurrency economy has been rife with black market sales, theft, ransomware, and money laundering — despite the curious fact that nearly every transaction in this economy is written to a permanent, unalterable ledger on the blockchain middle. New evidence suggests that years of advancements in blockchain tracking technology and the crackdown on the illegal underworld may be having an impact — reducing if not overall crime, then at least the number of money laundering channels, and thus the black market for cryptocurrencies cashing in on other currencies. There are more options for income than there have been in a decade.
Cryptocurrency tracking firm Chainalysis, as part of its annual crime report focused on money laundering released today, noted a new consolidation of cryptocurrency criminal cash-out services over the past year. It counted just 915 of these services being used in 2022, the fewest since 2012 and the latest sign of a steady decline since 2018. Chainalysis Says Fewer Exchanges Now Allow Laundering of Cryptocurrencies in Dollars, Euros, and Yen: Nearly 68% of Black Market Cash-Outs Are Now Processed by Just Five Cryptocurrency Exchanges, Study Finds
In fact, Chainalysis found that just 542 cryptocurrency deposit addresses received more than half of the $6.3 billion in total illicit funds it tracked to these withdrawal services in 2022, and only Four Addresses received $1.1 billion of these funds.
Kim Grauer, director of research at Chainalysis, said the dramatic reduction in so-called cryptocurrency criminal “exits” is a result of the government’s ongoing crackdown on cryptocurrency money laundering and a sign that additional enforcement is being implemented. “Shockingly, some of these deposit addresses moved more than $100 million in illicit funds and are still operating while being very transparent and easily viewable through blockchain analysis,” Grauer said. “So it does look like a good choke point where we can shut down and analyze and sort of eradicate that activity.”
Meanwhile, it’s far from clear whether total cryptocurrency crime will rise or fall in 2022: By some measures, data from Chainalysis shows that the criminal use of cryptocurrencies increased last year despite a sharp decline in their exchange rates . But those numbers include a surge in illicit trading on sanctioned cryptocurrency exchanges — which may have had less to do with rising crime and more with the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which has increasingly cracked down on the cryptocurrency underground. Major players are involved in implementing these sanctions. Last April, for example, OFAC sanctioned Russia-based exchange Garantex, saying it laundered more than $100 million in proceeds of crime, including ransomware payments. The previous year, it had also sanctioned two other Russian exchanges, Chatex and Suex, both of which have since collapsed. Just last week, OFAC sanctioned another exchange, Bitzlato, and the DOJ indicted its Russian founder, Anatoly Legkodymov, and took his business offline.
“If there’s no way to convert the ransom money into something usable, you don’t have a ransomware attack,” Grauer said. “We’re really seeing what OFAC is doing and what we’re really emphasizing is that the export of money laundering is a facilitator of crime. And I think the crackdown that’s going on shows that people understand they’re at a point where they can meaningfully intervene.”
