Most criminal cryptocurrency is funneled through just 5 exchanges
The ledger remembers all — Most criminal cryptocurrency is funneled through just 5 exchanges A few big players are moving a shocking amount of currency in a tight market.
Andy Greenberg, wired.com – Jan 28, 2023 12:15 pm UTC EnlargeEugene Mymrin/Getty Images reader comments 76 with 0 posters participating Share this story Share on Facebook Share on Twitter Share on Reddit
For years, the cryptocurrency economy has been rife with black market sales, theft, ransomware, and money launderingdespite the strange fact that in that economy, practically every transaction is written into a blockchains permanent, unchangeable ledger. But new evidence suggests that years of advancements in blockchain tracing and crackdowns on that illicit underworld may be having an effectif not reducing the overall volume of crime, then at least cutting down on the number of laundering outlets, leaving the crypto black market with fewer options to cash out its proceeds than its had in a decade.
In a portion of its annual crime report focused on money laundering that was published today, cryptocurrency-tracing firm Chainalysis points to a new consolidation in crypto criminal cash-out services over the past year. It counted just 915 of those services used in 2022, the fewest its seen since 2012 and the latest sign of a steady drop-off in the number of those services since 2018. Chainalysis says an even smaller number of exchanges now enable the money-laundering trade of cryptocurrency for actual dollars, euros, and yen: It found that just five cryptocurrency exchanges now handle nearly 68 percent of all black market cash-outs.
In fact, Chainalysis saw just 542 cryptocurrency deposit addresses receive more than half of the $6.3 billion in total illicit funds it tracked to those cash-out services in 2022, and just four addresses received $1.1 billion of those funds. Advertisement
That intense narrowing of so-called off-ramps for crypto crime is a result of an ongoing government crackdown on crypto money laundering and a sign of additional enforcement on the way, says Kim Grauer, Chainalysis director of research. Its shocking to see some of these deposit addresses moving more than a hundred million dollars in illicit funds and still operating when its something thats extremely transparent and easy to see with blockchain analytics, Grauer says. So it does seem like a good chokepoint, where we can shut down and profile andto some degreeeradicate this activity.
Whether the overall amount of crypto crime rose or fell in 2022, meanwhile, is far from clear: By some measures, Chainalysis data has shown that criminal use of cryptocurrency increased last year despite the steep decline in cryptocurrency exchange rates. But those numbers include a huge spike in illegal transactions at sanctioned cryptocurrency exchangeswhich may have less to do with a rise in crime than with the US Treasurys Office of Foreign Asset Control (OFAC) increasingly imposing those sanctions on major players in the crypto underground. In April of last year, for instance, OFAC sanctioned Garantex, an exchange based in Russia that it says laundered over $100 million in criminal proceeds, including ransomware payments. The year before, it sanctioned two other Russian exchanges, Chatex and Suex, which have since gone out of business. And just last week, OFAC sanctioned another exchange, Bitzlato, and the Justice Department indicted its Russian founder, Anatoly Legkodymov, and tore his operation offline. Page: 1 2 Next → reader comments 76 with 0 posters participating Share this story Share on Facebook Share on Twitter Share on Reddit Advertisement Channel Ars Technica ← Previous story Next story → Related Stories Today on Ars
