Cryptocurrency Money Laundering Relies on Surprisingly Few Addresses, Report Finds

Cryptocurrency money-laundering services seem to be booming, with funds surging in from criminal activities, but it turns out that a small number of deposit addresses received 75% of all cryptocurrency, by value, sent from illicit addresses in 2020, according to a new report.

Criminals who receive their payments in cryptocurrency can’t really access those funds at their leisure and often go to third parties such as cryptocurrency services and money services businesses (MSBs) to launder their money. Only a few deposit addresses are responsible for receiving much of the illegal funds, but tracking many of these services is challenging.

“The data shows that a group of just 1,867 deposit addresses received 75% of all cryptocurrency value sent from illicit addresses in 2020,” notes the Chainalysis report. “A smaller group of 270 deposit addresses received 55%.”

“Thinking in terms of raw value rather than percentages, those 270 addresses collectively received $1.3 billion worth of illicit cryptocurrency in 2020, and a smaller group of just 24 received over $500 million worth of illicit cryptocurrency in 2020,” the analysis reveals.

It’s good news that 1,867 addresses received 75% of all criminally linked cryptocurrency funds in 2020. That makes it much easier for law enforcement to pressure those online services, knowing that shutting them down has a significant effect on the criminal gangs operating these schemes.

The Chainalysis analysis outlines another trend: Russia is the primary recipient of dark market funds, likely due to the Hydra dark market that serves Russian and many other Russian-speaking countries. China takes second place, but only because of the criminal activity related to the Lazarus Group (APT38), which is linked to North Korea.

On the last note, the silver lining is that most of the funds moved through these cryptocurrency services don’t seem illicit in nature, and only a small amount is tied to criminal groups.

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