Unfortunately, cryptocurrencies are no longer used for only investing and e-commerce. For the past year, malicious individuals and fraudsters have been using crypto for their criminal activities, finding shelter from the ease of access and anonymity that cryptocurrency provides. Unsurprisingly, cybercrimes have also increased just as fast within the crypto space.
On January 26, 2022, Chainalysis issued a report revealing that cybercriminals are finding more and more ways to earn money at a drastically fast pace. In 2021 alone, the laundered cryptocurrency reached approximately $8.6 billion, which shows a 30% increase from 2020. Crypto exchanges were primarily the targets of cybercriminals, who laundered over $33 billion worth of crypto since 2017.
Chainalysis notes that it’s not surprising how money laundering has been an unfortunate trend as of late, especially since legitimate and illicit companies have been rapidly on the rise. In the case of digital assets like crypto, money laundering involves illegally obtaining the funds, changing the origin, and then transferring them to legit financial firms so the criminals can cash out physical money.
According to the research, almost 17% out of 8.6 billion laundered funds were transferred to DeFi apps. In contrast, malicious groups only moved 2% of laundered funds to decentralized business models. The report also reveals that mixers, mining pools, and high-risk exchanges have been seeing a drastic increase in the number of funds sent in by illicit wallet addresses.
Mixers are handy to malicious groups, as they combine legal and illegal crypto funds to cover up the trail. In other words, it will be difficult for people to trace where the assets were from originally.
2021 Had $8.6 Billion Laundered Crypto
It’s worth noting that cybercriminals transferred over half of the stolen funds (as much as $750 million) to DeFi apps. Chainalysis points out that $8.6 billion of laundered money from last year shows that crimes like ransomware attacks occur in the crypto space and not with paper currency.
One common way criminals profit is by taking paper currency and converting them into crypto. From there, they can launder the funds via different possible transactions.
Due to the drastic increase in crypto-related crimes, the South Korean government recently imposed the Travel Rule on cryptocurrency exchanges. In this new rule, crypto users must partner with their local banks to allow the government to spot money launders and fraud easily.
