New data from market intelligence firm Chainalysis reveals that bad actors are using crypto mixing services at unprecedented rates.
According to a new blog post from company Crypto Insights, the use of crypto mixing has increased in 2022, with illicit addresses accounting for 11% more funds sent to mixers compared to last year.
“While the value received by mixers fluctuates widely from day to day, the 30-day moving average hit an all-time high of $51.8 million in cryptocurrency on April 19, 2022, roughly doubling close to incoming volumes at the same time in 2021…
Illicit addresses account for 23% of funds sent to mixers so far in 2022, up from 12% in 2021.”
A crypto mixing service is a tool used to make it difficult to track the movement of money by pooling funds from many different users and mixing them together. Users would then withdraw their funds, which have now been randomized.
According to Chainalysis, the market sector contributing the most to increasing crypto mix usage rates is decentralized finance (DeFi).
“The increases come primarily from increased volumes sent from centralized exchanges, DeFi protocols and, more specifically, addresses linked to illicit activity.
DeFi protocols in particular have grown not only in terms of value sent to mixers, but also in terms of share of all volume sent to mixers, which makes sense given that the timing coincides with the growing importance of DeFi within of the global cryptocurrency ecosystem.
Chainalysis also notes that while there are legitimate use cases for crypto mixers, such as financial privacy, the digital asset community and regulators should recognize that cybercriminals associated with hostile governments are taking advantage of the service.
“Mixers pose a tough question for regulators and members of the cryptocurrency community. Virtually everyone would agree that financial privacy is valuable, and in a vacuum, there’s no reason why services like blenders shouldn’t be able to provide it.
However, data shows that mixers currently pose a significant money laundering risk, with 25% of funds coming from illicit addresses, and cybercriminals associated with hostile governments are taking advantage of this.
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