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Crypto money laundering drops nearly 30% in 2023 as cyber criminals change tactics Crypto money laundering drops nearly 30% in 2023 as cyber criminals change tactics

Crypto money laundering drops nearly 30% in 2023 as cyber criminals change tactics

Sophisticated crypto criminals are adapting their money laundering strategies and exploiting services like crypto mixers and cross-chain bridges.

Crypto money laundering drops nearly 30% in 2023 as cyber criminals change tactics

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

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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, illicit addresses moved approximately $22.2 billion in digital assets to various crypto services in 2023, marking a notable drop from the $31.5 billion transferred in 2022. This decline aligns with a 14.9% decrease in legitimate and illegal crypto transaction volumes.

Crypto money laundering
Crypto Money Laundering (Source: Chainalysis)

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 $3.4 billion in 2023, a significant rise from the $2 billion received by 40 addresses in 2022. Similarly, 1,425 exchange addresses received over $1 million each, amounting to approximately $6.7 billion in 2023, compared to $6.3 billion across 542 addresses in 2022.

Meanwhile, funds from illicit addresses to bridge protocols surged from $312.2 million in 2022 to $743.8 million in 2023.

‘Changing tactics’

Chainalysis noted that sophisticated crypto criminals with on-chain laundering skills, like the infamous North Korean-backed hackers Lazarus Group, are adapting their money laundering strategies and exploiting new services like crypto mixers and cross-chain bridges.

For context, the regulatory pressure on crypto mixing services like Sinbad and Tornado Cash, forced Lazarus Group to shift its money laundering strategy to YoMix, new mixing service provider.

YoMix
Funds sent to YoMix (Source: Chainalysis)

According to Chainalysis, this transition led to a notable increase in YoMix’s activity for last year, with its inflows rising more than fivefold. Additionally, nearly one-third of YoMix’s inflows can be traced back to wallets associated with crypto hacks.

“The growth of YoMix and its embrace by Lazarus Group is a prime example of sophisticated actors’ ability to adapt and find replacement obfuscation services when previously popular ones are shut down,” Chainalysis concluded.

In addition, North Korean-backed hacker groups were observed to be among the most common crypto criminals that utilized cross-chain bridges for money laundering activities.

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