A recent report by Chainalysis has shed light on a significant decline in money laundered through cryptocurrency exchanges, indicating a 29% decrease in 2023. According to the findings disclosed on Thursday, illicit funds dipped from $31.5 billion in 2022 to $22.2 billion in 2023, marking a notable reduction of approximately $9.3 billion.
The blockchain research platform attributed this decline to an overall decrease in crypto transaction volume, encompassing both legitimate and illicit activities. Notably, centralised exchanges remained the primary destination for funds sent from illicit addresses, maintaining a relatively stable rate over the past five years.
However, Chainalysis highlighted a noteworthy shift in the distribution of illicit funds, with a growing share directed towards Decentralised Finance (DeFi) protocols. This change, it noted, was primarily driven by the expanding landscape of DeFi and the inherent transparency of these platforms, making them less favorable for obfuscating fund movements.
While the report indicated a similarity between the trends observed in 2023 and 2022 regarding the breakdown of service types used for money laundering, it also noted some significant changes. Notably, there was a slight decrease in the share of illicit funds directed to illicit service types, coupled with an increase in funds flowing towards gambling services and bridge protocols.
Chainalysis emphasized notable increases in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds, as well as funds transferred from ransomware wallets to gambling platforms. Furthermore, the report highlighted that in 2023, 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each, collectively amassing $3.4 billion in illicit cryptocurrency—a stark contrast to the previous year, where only 40 addresses received such amounts.
As authorities and regulatory bodies continue to enhance their oversight of cryptocurrency transactions, these insights provide valuable information for combating illicit activities within the digital asset space.
