Criminals are getting smarter at hiding dirty money through crypto. A new report from Chainalysis shows how bad this problem has become. According to the July 11th report, these criminals move billions of dollars from their wallets to crypto exchanges every month.

Related: Anti-Money Laundering Case: BitMEX Admits Guilt To Violating Bank Secrecy Act

It would’ve been easy to spot if they just do a one-way transaction. But that’s far from the case because it’ll be easy for the police and crypto exchanges to catch them. Instead, they’re using far more sophisticated tricks to throw the authorities off their scent.

Let's break down the report:

  • Billions of dollars are flowing from illicit wallets to conversion services every month
  • Over 80% of laundered funds pass through intermediary wallets
  • Mixers, privacy coins, and cross-chain bridges are the new favorite tools of crypto crooks
  • Stablecoins are increasingly popular for laundering, adding a new wrinkle to tracking efforts

It seems the crypto criminals have been binge-watching "Breaking Bad" and taking notes from Walter White's money laundering techniques. But instead of a car wash, they're using a variety of techniques to make their dirty money squeaky clean.

First things first: we're not talking about chump change here. Since 2019, nearly $100 billion in funds have been sent from known illicit wallets to conversion services. The peak year was 2022, with a whopping $30 billion identified.

But here's where it gets tricky: these hackers and launderers aren't just dumping their loot in one place. Oh no, they're getting craftier and craftier. 

Over 80% of the total value in these laundering channels is passing through intermediary wallets, or "hops." And just to add another layer of complexity, criminals are increasingly turning to stablecoins—because, well, it blends well with the traditional finance industry.

Other tactics the report highlighted that launderers use include mixers, privacy coins, and cross-chain bridges.

Take the Atomic Wallet exploit by North Korea's hacking group TraderTraitor in June 2023, for example. Over $35 million was stolen and rinsed out using Sinbad.io.

The Atomic Wallet is just one of many incidents that show just how high-tech these actors are. They are operating with levels of sophistication that would put some tech startups to shame.

Now, you might be thinking, "Surely all this complicated maneuvering must leave some kind of trail?" 

Well, yes and no. Of course, blockchain technology provides an immutable record of transactions. 

But the sheer volume and complexity of these operations are making it increasingly difficult for law enforcement to keep up.

But there’s an upside to all this ping-pong movement. 

Centralized exchanges remain the primary destination for illicit funds, with over 50% of dirty crypto ending up at these platforms. This concentration provides a potential chokepoint for law enforcement and regulators to focus their efforts.

However, the report notes a decline in the volume received by centralized exchanges, suggesting that their Anti-Money Laundering (AML) programs might be improving.

Overall, it's clear that law enforcement and regulatory bodies have their work cut out for them. Law enforcement will have to step it up if they want to keep up with the methods used by criminals.

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