Cyber Criminals Using Crypto Mixing Services at Record Rates, According to Chainalysis

New data from market intelligence firm Chainalysis reveals that bad actors are using crypto mixing services at an unprecedented rate.

According to a new blog post According to the crypto insight firm, cryptocurrency mixing usage skyrocketed in 2022, with illicit addresses accounting for 11% more funds sent to mixers compared to last year.

“While the value received by mixers fluctuates significantly from day to day, the 30-day moving average hit an all-time high of $51.8 million in crypto on April 19, 2022, nearly doubling incoming volumes at the same point in time. 2021…

Illicit addresses account for 23% of funds sent to mixers so far in 2022, up from 12% in 2021.”

A cryptocurrency mixing service is a tool used to make it more 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.

Chainalysis says that the market sector contributing the most to rising cryptocurrency mixing usage rates is decentralized finance (DeFi).

“The increases come primarily from higher volumes sent from centralized exchanges, DeFi protocols, and most notably addresses connected to illicit activities.

DeFi protocols in particular have risen not only in terms of value sent to mixers, but also in terms of the share of all volume sent to mixers, which makes sense given that the timing coincides with DeFi’s growing prominence within of the cryptocurrency ecosystem in general.

Chainalysis also notes that while there are legitimate use cases for crypto mixers, such as financial privacy, the digital asset community and regulators need to recognize that cybercriminals associated with hostile governments are taking advantage of the service.

“Mixers present a difficult question for regulators and members of the cryptocurrency community. Virtually everyone would recognize that financial privacy is valuable and that, in a vacuum, there’s no reason why services like mixers can’t provide it.

However, the data shows that mixers currently pose a significant money laundering risk, with 25% of funds coming from illicit addresses, and that cybercriminals associated with hostile governments are taking advantage of it.”

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