- Money laundering via crypto dropped 29.5% in 2023 vs 2022 due to decreased crypto transaction volume overall.
- Centralized exchanges remained the primary destination for illicit crypto funds, though bridges and gambling saw increases.
- Sophisticated groups like Lazarus are adapting tactics, moving from shut-down services like Tornado Cash to new mixers like YoMix.
Crypto money laundering experienced a significant decline of 29.5% in 2023 compared to the previous year primarily due to a decrease in overall crypto transaction volume, according to a Chainalysis report. This shift in laundering tactics highlights sophisticated actors’ ability to adapt when previously popular services are shut down.
Where the Money Went
Centralized exchanges remained the primary destination for funds from illicit addresses, although there was a noticeable increase in criminal fund movements toward gambling services and bridge protocols. In detail, 109 exchange addresses received over $10 million each from illicit sources, totaling $34 billion in 2023. Funds from illicit addresses to bridge protocols surged from $3.122 billion in 2022 to $7.438 billion in 2023.
Changing Tactics
Chainalysis noted that sophisticated crypto criminals like the Lazarus Group are adapting their money laundering strategies and exploiting new services like crypto mixers and cross-chain bridges. For example, regulatory pressure on services like Tornado Cash forced Lazarus Group to shift its laundering to YoMix, a new mixing service provider. This transition led to a fivefold increase in YoMix’s inflows, with nearly one-third traceable back to crypto hacks. Additionally, North Korean-backed hacker groups were among the most frequent users of cross-chain bridges for laundering.
Conclusion
The growth of new services like YoMix and their embrace by sophisticated actors like Lazarus Group demonstrates crypto criminals’ ability to adapt when previously popular money laundering tactics are shut down. As criminals exploit new technologies like mixers and bridges, tracking and preventing illicit fund flows remains an ongoing challenge. Regulators and blockchain analytics firms must continue working to detect new laundering techniques as the crypto ecosystem evolves.
