Ask any cynical person about cryptocurrencies and they will tell you that it’s a toll for money laundering. Frankly, considering the cryptographic nature of crypto transactions, it wouldn’t be a far-fetched idea either. However, a new study from Chainalysis revels that a tiny fracture of crypto transactions accounted for money laundering in 2021. Despite the gradual growth, the less than 1% in money laundering is in fact much lower than advertised.
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Crypto Transactions in 2021
New data from Chainalysis sheds light on money laundering schemes involving digital assets. To begin with, good news is that the total percentage of money laundering in crypto transactions is at 0.05%. On the other hand, bad news is that there was a 30% increase in this sector. Think of it how you want, but criminals are finally warming up to digital assets and a decentralized future. Joking aside, the data reveals that fiat currency is still the currency of choice for those with dirty money.
To put that in perspective, 5% of the global gross domestic product is laundered every year in fiat. Considering the scale, the 0.05% of crypto transactions accounted for laundering are rookie numbers.
“Overall, cybercriminals have laundered over $33 billion worth of cryptocurrency since 2017, with most of the total over time moving to centralized exchanges.
For comparison, the UN Office of Drugs and Crime estimates that between $800 billion and $2 trillion of fiat currency is laundered each year – as much as 5% of global GDP. For comparison, money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021.”
DeFi Takes the Cake
Interestingly, a very small number of entities were involved in laundering activities. In that regard, not that many accounts were involved.
A group of just 583 deposit addresses received 54% of all funds sent from illicit addresses in 2021. Each of those 583 addresses received at least $1 million from illicit addresses, and in total, they received just under $2.5 billion worth of cryptocurrency.
An even smaller group of 45 addresses received 24% of all funds sent from illicit addresses for a total of just under $1.1 billion. One deposit address received just over $200 million, all from wallets associated with the Finiko Ponzi scheme.”
According to the study, DeFi was the most affected by money laundering. With a hefty 1,964% year-over-year increase in total value of illegitimate funds.
Overall, the overall amount of money laundering in crypto transactions was approximately $8.6 billion in 2021 which is 30% higher than 2020.
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