- Cybercriminals laundered $8.6 billion in 2021 up 30% from 2020, Chainalysis data showed on Wednesday.
- Some $33 billion in crypto has been laundered since 2017, mostly through centralized exchanges, Chainalysis said.
- DeFi platforms accounted for $900 million of the 2021 total, a 1,964% year-over-year increase.
As cryptocurrencies reached dizzying new heights in 2021, so did online fraud, as cybercriminals laundered 30% more crypto last year than they had the previous year, according to data on Wednesday from Chainalysis.
The Chainalysis Money Laundering Crypto Crime report showed $8.6 billion worth of cryptocurrency was laundered in 2021, up 30% from the previous year.
Money laundering is the key to cryptocurrency-based crime according to Chainalysis and has become a growing method for cybercriminals to obscure the source of their funds.
Chainalysis already told Insider at the beginning of January that crypto-related crime had risen 80% in 2021.
However, money laundering accounted for just 0.05% of all cryptocurrency transaction volume last year, the report showed.
Cybercriminals have laundered over $33 billion worth of cryptocurrency since 2017, Chainalysis said. Up until now, most of this went through centralized exchanges. But for the first time since 2018, centralized exchanges didn't receive the majority of funds being sent by illicit addresses, according to the report.
According to Chainalysis, 47% of laundered crypto went to centralized exchanges, and DeFi platforms accounted for a growing number of destinations in 2021. DeFi platforms accounted for $900 million worth of crypto money laundering last year, which represents a 1,964% year-over-year increase.
Chainalysis head of research Kim Grauer has told Insider previously that one reason scams might be so prevalent on DeFi protocols is related to the smart contracts governing these networks.
"A lot of the code that is writing these protocols is public and open-sourced," she told Insider. "So anyone can go over them and look for bugs in the code that they can then exploit."
Chainalysis explored how DeFi protocols for money laundering boomed in 2021 by looking at the Spartan Protocol hack, which resulted in fraudsters exploiting code vulnerability to steal over $30 million sparta token. The hackers then converted these into ethereum and bitcoin composites, anyETH and any BTC, before swapping the anyBTC for actual bitcoin and moving it from the hacked blockchain to the bitcoin blockchain.
Using DeFi protocols meant for cross-chain transactions, moving from one blockchain to another, the hacker moved the anyETH to the ethereum blockchain and from here sent those funds to a decentralized exchange before using Tornado Cash to wash the funds.
The popularity of these techniques is already persevering in 2022. In the Crypto.com attack, last week Tornado Cash was used again to obscure the transactions.
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