Money laundering of crypto and hacks reach record highs in 2022
Crypto money laundering and hacks exploded in 2022, while the use of crypto mixers declined.
Crypto money laundering and hacks surged in 2022, while the use of crypto mixers declined. This comes from a new Chainalysis report.
Crypto money laundering grew sharply in 2022. A new report from blockchain analytics firm Chainalysis shows that nearly $24 billion was moved by cybercriminals through cryptocurrencies to launder the money, a 68% increase from the previous year.
Centralized exchanges remain the most-used avenue. Almost half of crypto sector money laundering involved providers like Binance, Coinbase, Kraken and other exchanges. On these platforms, cybercriminals try to quickly convert their loot to fiat and cash out.
But DeFi protocols remained popular too. According to Chainalysis, hackers were mostly responsible for a big rise. Because during raids they often steal coins or tokens that don’t appear on popular exchanges, they use decentralized exchanges to swap their loot into more widely used cryptocurrencies. Ether remains the most popular coin.
2022 - the year of crypto hacks?
Overall, 2022 was the most successful year ever for hackers, notes the US analytics firm. Cybercriminals netted a total of $3.8 billion. March and October stood out, together contributing nearly half of the yearly total. The Ronin Bridge hack from the blockchain game Axie Infinity and the attack on the Solana DeFi protocol Mango Markets stood out.
A large portion of the attacks were carried out by North Korean hacker groups like Lazarus. In total, the hackers, believed to be in service of the North Korean regime, stole $1.7 billion.
DeFi protocols, especially cross-chain bridges, remained the main targets in 2022. The attackers netted $3.1 billion in total. The technology powering the platforms wasn’t “robust enough,” Chainalysis CEO Michael Gronager said. “Hackers can quickly identify vulnerabilities, exploit them and steal the funds.” Chainalysis recommends DeFi protocols strengthen code audits by cybersecurity firms.
Crypto mixers declining due to sanctions
Usage of so-called crypto mixers declined. While $11.5 billion flowed to mixers in 2021, it was only $7.8 billion in 2022. The mixers blend users’ crypto together, making tracing harder.
The analytics firm attributes part of the drop to sanctions on popular services Tornado Cash and Blender.io. In August, the US Treasury listed the platforms on the blacklist to curb money laundering by primarily North Korean hacker groups. Even after the ban, they remain the biggest “consumers” of blender services, with more than 85%.
Crypto winter leaves cybercriminals poorer
Even though overall laundering in the crypto space rose in 2022, the year’s market moves didn’t spare cybercriminals. Mainly hackers who held onto their loot instead of moving it into the legal economy took big losses. While the total value of seized cryptocurrencies in 2021 was $12 billion, it was only $2.9 billion a year later. Chainalysis notes seizures by authorities helped push this decline further.
