No doubt that with bitcoin and the establishment of the crypto space about 12 years ago came the furthering of financial crime. To this day, many analysts and industry experts express concern regarding the amount of money laundering and other forms of criminal behavior that continue to rock the crypto space and drag it further away from legitimate or mainstream territory.

Is Money Laundering as Big a Problem as We Thought?

The good news is that while the crime may seem widespread and heavy, new data from blockchain firm Chainalysis suggests that much of the money laundering that’s occurring in the crypto space is being reserved to just a handful of addresses. There are millions upon millions of crypto addresses that have been created in just the last year alone, so the fact that much of the money laundering is taking place amongst less than 300 separate accounts is a good sign.

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Chainalysis says in a recent report that about 55 percent of the world’s crypto money laundering – that’s more than half – is reserved to about 270 digital currency accounts. Where the money comes from tends to be a little more diverse, with illicit funds potentially coming from online gambling sites, mixing services and even high-end operations.

In addition, money is also known to derive from terrorist funding, crypto theft, ransomware attacks and the sales of illegal items such as drugs, counterfeit data and certain firearms. Chainalysis, however, further states that only about 1,867 digital addresses received about 75 percent – roughly $1.7 billion – of the cryptocurrency stolen in 2020.

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While the problem still exists and needs to be handled, perhaps culprits who engage in this behavior will be easier to find given the funds and the services they utilize tend to be somewhat grouped together. Either way, Chainalysis comments in its report that this behavior has increased heavily since 2019, suggesting that maybe said criminals are getting a bit sloppy.

This Behavior Has Surged in the Past Two Years

In the document, Chainalysis writes:

This level of concentration is greater than in 2019. We see a much greater share of illicit cryptocurrency going to addresses taking in between $1 million and $100 million worth of cryptocurrency per year. We believe the growing concentration of deposit addresses receiving illicit cryptocurrency reflects cybercriminals’ increasing reliance on a small group of over-the-counter (OTC) brokers and other nested services specializing in money laundering.

While crime may not be as strong as we initially believed, many are still trying to use digital crime as an excuse to place limits on the space. One such figure is Janet Yellen, the new Treasury Secretary of the United States. In a recent statement, Yellen mentioned that she was looking to place limits on crypto activity in the future given that bitcoin and other digital currencies open to door to money laundering and other financial naughtiness.

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Tags: Chainalysis, crypto crime, Money Laundering


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Chainalysis: Money Laundering and Crypto Crime Is More Concentrated Than We Think

by Chris T. Schuster
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