While crypto worth a total of $33 billion has been laundered since 2017, estimates from the UN Office of Drugs and Crime suggests this pales into comparison to the offline world.
Of course, these figures don't tell the full story. The figure for 2021 only takes "cryptocurrency-native crime" into account, such as ransomware attacks and darknet market sales. And in a new report, Chainalysis says there is evidence to suggest that funds from offline crime — such as drug trafficking — are increasingly being turned into crypto so they can be laundered. Unfortunately, determining the scale of such activity is easier said than done.
A Big Problem?
"We cite those numbers not to try and minimize cryptocurrency's crime-related issues, but rather to point out that money laundering is a plague on virtually all forms of economic value transfer, and to help law enforcement and compliance professionals be aware of just how much money laundering activity could theoretically move to cryptocurrency as adoption of the technology increases."
The Chainalysis data also indicates that "money laundering activity in cryptocurrency is also heavily concentrated" — and funds often end up flowing to a "surprisingly small group of services" that seem to be purpose built for obscuring transactions. The report adds:
"Law enforcement can strike a huge blow against cryptocurrency-based crime and significantly hamper criminals' ability to access their digital assets by disrupting these services."
This might be a rather optimistic take on things. Just like new ransomware groups form after old ones are disrupted, it's highly likely new exchanges that facilitate criminal transactions will emerge once dodgy platforms are shuttered.