Most criminal cryptocurrencies are routed through only 5 exchanges

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For years, the cryptocurrency economy has been rife with black market sales, theft, ransomware, and money laundering—despite the curious fact that in that economy, virtually every transaction is recorded on a blockchain’s permanent, immutable ledger. But new evidence suggests that years of progress in tracking blockchain and cracking down on that illegal underworld may be having an effect — if not reducing the overall volume of crime, at least reducing the number of money laundering centers and disrupting the digital currency black market. Fewer options to cash his earnings than a decade ago.

In part of its annual crime report with a focus on money laundering released today, cryptocurrency tracking firm Chainalysis points to new integration in crypto-criminal liquidity services over the past year. That accounted for just 915 of those services used in 2022, the lowest since 2012 and the latest sign of a steady decline in numbers since 2018. Even fewer exchanges now allow money laundering, Chainalysis says. Exchanging cryptocurrencies for real dollars, euros and yen: It was found that just five cryptocurrency exchanges currently handle approximately 68% of all black market liquidity.

In fact, Chainalysis saw that just 542 cryptocurrency deposit addresses received more than half of the $6.3 billion in total illicit funds it tracked to those cash services in 2022, and only four Addresses received $1.1 billion of these funds.

Kim Grauer, director of research at Chainalysis, says the sharp drop in the so-called “off-ramp” for crypto-crime is the result of an ongoing crackdown on crypto-money laundering and a sign of more enforcement to come. “It’s shocking to see some of these deposit addresses moving over a hundred million dollars in illicit funds and still operating, when it’s something that’s very transparent and easily visible with blockchain analysis,” Grauer said. “So it seems like a good choke point, where we can shut it down and profile it and — to some extent — eradicate that activity.”

Meanwhile, it’s not entirely clear whether the overall rate of crypto-crime will increase or decrease in 2022: by some measures, Chainalysis data has shown that criminal use of cryptocurrencies increased last year, despite a sharp drop in cryptocurrency exchange rates. has been found But those figures include a sharp increase in illegal transactions on sanctioned cryptocurrency exchanges — which may have less to do with rising crime than with the US Treasury’s Office of Foreign Assets Control (OFAC) increasingly imposing sanctions on major players in the cryptocurrency underground. applies . For example, in April of last year, OFAC sanctioned Garantex, a Russian-based exchange that it says laundered more than $100 million in criminal proceeds, including ransomware payments. The previous year, it banned 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 Legkudimov, and tore his operation offline.

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