Thursday, March 28

Cybercriminals prefer to launder money with fiat and altcoins before using bitcoin


At least 8.6 billion US dollars (USD) was laundered with cryptocurrencies during 2021. Most of it was with ethers (ETH), stable coins or stablecoins and other alternatives. Bitcoin (BTC), the pioneer cryptocurrency, was the least used for these illegal activities.

This is verified by the blockchain analysis firm, Chainalysis, in a blog post, which is part of a cryptocurrency crime report that will be revealed next February.

According to the company, what was washed in 2021 was 30% higher than in 2020, when USD 6,600 million were compromised in activities outside the law.

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“Although such an increase is not surprising given the significant growth in both legitimate and illicit cryptocurrency activity in 2021. We should also note that these numbers only represent funds derived from native crimes, meaning cybercriminal activities (with cryptocurrencies), such as sales in the darknet market or ransomware attacks in which the profits are almost always made in cryptocurrencies instead of fiat currency.”

Chainalysis, blockchain analysis firm.

There is the highlight. The money laundering activity was mostly done with other currencies and not with bitcoin. This asset was the least concentrated in the market. According to the company, the 20 most well-known washing deposit addresses for the company, receive just 19% of BTC sent from illegal addresses.

This is important, especially since 57% of the funds are with stablecoins, such as Tether (USDT) or USD Coin (USDC); while 63% respond to ethers. The remaining 68% has to do with other alternative cryptocurrencies.

“Some money laundering services may have ceased operations after seeing actions taken against illicit platforms, forcing cybercriminals to disperse their money laundering activity to other operators. It is also possible that the washing services have continued to operate but have extended their activity to more deposit addresses, which would contribute to the decrease in concentration”.

Chainalysis, blockchain analysis firm.

Concentration of money laundering: total value received in deposit addresses of BTC, ETH, stablecoins and altcoins. Fountain: Chainalysis.

More with fiat than with cryptocurrencies

While cybercriminals have laundered more than $33 billion in crypto since 2017, with much of that digital money moving to centralized exchanges, Chainalysis acknowledges that, according to UN data, Between USD 800 billion and USD 2 trillion are laundered annually with fiat money, such as dollars or euros. This is about 5% of world GDP.

In this sense, they valued that money laundering represented only the 0.05% of all cryptocurrency transaction volume over the past year.

Chainalysis highlights that money laundering “is a plague on virtually all forms of economics and transfers of value.” For that, and to help enforce the law, they want to be “aware of how much money laundering activity could theoretically move to cryptocurrencies as adoption of the technology increases.”

“The biggest difference between fiat and crypto-based money laundering is that due to the inherent transparency of blockchains, we can more easily track how criminals move assets between wallets and services in their efforts to convert their funds. cash”.

Chainalysis, blockchain analysis firm.

Total money laundered in cryptocurrencies valued from 2017 to 2021. Source: Chainalysis.

DeFi protocols grow as the destination of laundered funds

According to Chainalysis, while centralized exchanges remain the leaders in receiving funds from illicit addresses, accounting for up to 47% of the global total, decentralized finance (DeFi) protocols have gained serious prominence.

However, decentralized exchanges received 17% of all funds sent from illegal wallets in 2021. A strong growth, compared to the 2% achieved in 2020.

That translates to a 1,964% year-over-year increase in the total value received by DeFi protocols from illicit addresses, reaching a total of $900 million in 2021.

“Mining pools, high-risk exchanges, and mixers (CoinJoins) also saw substantial increases in value received from illicit addresses as well,” they noted.

Coincidentally, DeFi protocols they are also the destination of funds that are stolen by hackers. A study by Chainalysis itself cited by CriptoNoticias reveals that 20% of shipments from addresses associated with hackers were executed to a decentralized terminal.

What Chainalysis shows makes it clear that the crimes that are carried out in the Bitcoin universe they are not necessarily related to the first cryptocurrency. The name of other digital assets is beginning to resonate, even in the field of illegality.



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