The money laundered through cryptocurrency exchanges declined by 29 per cent in 2023, according to a Chainalysis report.
The report, obtained on Thursday, revealed that those illicit funds dropped by approximately $9.3bn, declining from $31.5bn in 2022 to $22.2bn in 2023.
The blockchain research platform noted that the drop could be attributed to an overall decrease in crypto transaction volume, both legitimate and illicit.
Chainalysis noted that centralised exchanges had been the primary destination for funds sent from illicit addresses, at a rate that has remained relatively stable over the last five years.
“Over time, the role of illicit services has shrunk, while the share of illicit funds going to DeFi protocols has grown.
“We attribute this primarily to the overall growth of DeFi generally during the period, but must also note that DeFi’s inherent transparency generally makes it a poor choice for obfuscating the movement of funds,” it said.
The firm indicated that the 2023 trend closely resembled 2022 regarding the breakdown of service types used for money laundering.
However, it added that there was a slight decrease in the share of illicit funds directed to illicit service types, accompanied by an increase in funds moving towards gambling services and bridge protocols.
“If we zoom in to look at how specific types of crypto criminals laundered money, we can see that there was a significant change in some areas. Most notably, we saw a huge increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds.
“We also observed a substantial increase in funds sent from ransomware to gambling platforms, and in funds sent to bridges from ransomware wallets,” it added.
Further, Chainalysis said 109 exchange deposit addresses received over $10m worth of illicit cryptocurrency each, and collectively, they received $3.4bn in illicit cryptocurrency in 2023.
“While that still represents significant concentration, in 2022, only 40 addresses received over $10m in illicit crypto, for a collective total of just under $2.0bn.