According to a recent report by Chainalysis, the amount of illicit funds laundered through cryptocurrency exchanges experienced a significant decline in 2023.
The report, released on Thursday, disclosed a noteworthy drop of approximately $9.3 billion, decreasing from $31.5 billion in 2022 to $22.2 billion in 2023.
The blockchain research platform attributed this decline to an overall reduction in crypto transaction volume, encompassing both legitimate and illicit activities.
Chainalysis highlighted that centralized exchanges remained the primary destination for funds originating from illicit sources, a trend that has remained relatively steady over the past five years.
However, the report pointed out a noteworthy shift in the distribution of illicit funds, with a growing proportion being directed towards decentralized finance (DeFi) protocols. Chainalysis attributed this shift to the transparency inherent in DeFi, which makes it less favorable for concealing the movement of funds.
Despite the similarities between 2022 and 2023 in terms of the breakdown of service types utilized for money laundering, the report noted a slight decrease in the share of illicit funds directed to traditional illicit service types. Conversely, there was an uptick in funds flowing towards gambling services and bridge protocols.
A deeper analysis revealed significant changes in specific areas of cryptocurrency criminal activity. Notably, there was a substantial increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds.
Additionally, funds originating from ransomware attacks showed a notable trend of being directed towards gambling platforms and bridge protocols.
The report highlighted that 109 exchange deposit addresses received over $10 million worth of illicit cryptocurrency each in 2023, collectively amassing $3.4 billion.
This represents a significant concentration of illicit funds; however, it marks an increase compared to 2022, where only 40 addresses received over $10 million, totaling just under $2.0 billion.
