The Federal Bureau of Investigation has identified 270 blockchain addresses as responsible for cryptocurrency laundering. There are more than 583 deposit addresses that received funds sent to these addresses. Of those, 45 received 24% of the funds sent from illicit addresses. These findings could impede the ability of criminals to convert cryptocurrency into cash.
270 blockchain addresses
According to a new report from Chainalysis, 270 blockchain addresses are responsible for 55% of all cryptocurrency laundering. This means that as of 2020, these addresses have received $1.7 billion in illicit funds. While cryptocurrency has become a hot topic in recent years, it has also created problems for the law enforcement community. While there is no one clear answer for how much cryptocurrency laundering has taken place on a daily basis, the numbers do appear alarming.
One explanation for the recent decline in cryptocurrency laundering is that the Bitcoin market has undergone law enforcement action. While this action may have deterred some money laundering, it has resulted in the loss of a lot of money for the public. In addition to cryptocurrency laundering, the Bitcoin blockchain has also become a target for cybercriminals. As such, law enforcement has been targeting these addresses in an effort to halt their activities.
This trend has continued into 2018. While the percentage of illicit cryptocurrency sent to these addresses has decreased in recent years, the geographical concentration of money laundering activity remains high. In the first half of 2018, 55% of cryptocurrency was sent to 270 service deposit addresses, down from 64% a year earlier. This may be due to law enforcement action, including the recent sanctions on a Russian OTC broker, Suex, and P2P exchange Chatex.
583 deposit addresses
The amount of cryptocurrency laundering activity has decreased, but there is still a concentration. According to the Cryptotract database, 583 deposit addresses received more than $1 million in illicit cryptocurrency between 2018 and 2020. These deposit addresses accounted for approximately 54% of the entire value of the illicit cryptocurrency. Of the remaining 473 deposit addresses, 264 received less than $1 million in illicit cryptocurrency.
The cryptocurrencies were stolen from DeFi platforms and other platforms last year, with the total amount exceeding $400 million. A study released by Chainalysis showed that the majority of funds from suspicious deposit addresses were redirected to a handful of services. These services are responsible for laundering more than half of the cryptocurrency.
According to the report, billions of dollars in cryptocurrency are laundered through these services each year. While this number is low by historical standards, the increase is significant. While this number is lower than previous years, it represents an increase of 30% over the past three years.
45 addresses received 24% of funds sent from illicit addresses
Despite increasing efforts to combat cryptocurrency money laundering, the concentration of activity remains high. The 270 service deposit addresses that received at least 24% of funds sent from illicit addresses in the last year remain the top recipients of illicit funds. In fact, this figure is expected to increase slightly in 2021. This is partly due to increased law enforcement efforts targeting cryptocurrency service deposit addresses. Last year, a Russian OTC broker was sanctioned by the US government after receiving tens of millions of dollars in illicit cryptocurrency. A P2P exchange, founded by the same person, was also sanctioned by OFAC.
The concentration of cryptocurrency money laundering varies depending on the type of cybercriminal or criminal. The chart below shows the share of funds sent to each criminal category.
Law enforcement action could hamper criminals’ ability to convert cryptocurrency into cash
In order to profit from cryptocurrency, cybercriminals must first convert it to cash. This process is known as money laundering. Most cryptocurrency moves from illicit addresses to certain services, including exchanges. Many of these services appear purpose-built for money laundering, according to an Europol report. Shutting down such exchanges could hamper criminals’ access to digital assets and impede their ability to commit crimes.
A recent arrest in New Zealand involves a man who was laundering $2 million using cryptocurrency to buy luxury vehicles, including a Lamborghini and a Mercedes G63. Law enforcement officials also recently unsealed a superseding indictment, accusing six individuals of conspiring to launder money through cryptocurrency. The investigation has revealed a network of front companies and casinos, which were used to disguise the criminal activity. One of the accused even used cryptocurrency to bribe a representative of the US Department of State.
While cryptocurrency is an emerging industry, the government is working to keep it from being a major target for crime. The Office of the Comptroller of the Currency has already issued its first cryptocurrency-related enforcement action. This action is a sweeping move toward curbing the criminals’ ability to convert cryptocurrency into cash.
