Don’t mind me, I’m just washing this currency. Photo: Shutterstock
They’ve been heralded as a way of breaking banks’ grip on global financial systems, but decentralised finance (DeFi) technologies are causing headaches for authorities as cybercriminals use the unregulated services to launder billions in cybercrime proceeds every year.
Cybercriminals laundered $11.9 billion ($US8.6b) worth of cryptocurrency using a variety of methods to avoid authorities’ attention, according to a new Chainalysis report that found use of DeFi exploded during 2021 – from 2 per cent of cryptocurrency money-laundering transactions in 2020, to 17 per cent last year.
That’s over $1 billion ($US750 million) worth of cryptocurrency being moved using DeFi, an emerging technology stack that enables the direct transfer of cryptocurrencies between two wallets without scrutiny by banks, regulators, or governments.
The majority of the DeFi-facilitated transfers related to stolen funds, according to Chainalysis – which matches source and destination wallets to trace funds within and between cryptocurrency networks – or to the North Korea-affiliated hackers that stole $550m ($US400m) worth of cryptocurrency last year to circumvent international sanctions.
“Money laundering is a plague on virtually all forms of economic value transfer,” the firm notes, citing UN Office of Drugs and Crime figures suggesting that up to $2.7t ($2t) of normal fiat currency is laundered…
