Chainalysis: 23% of funds in crypto mixers are associated with illegal activities

What’s new? According to a report by analytics company Chainalysis, in 2022 23% of funds sent to the mixers of cryptocurrency transactions are linked to illegal addresses. In 2021, their share was only 12%. Most of the illegal assets came from Russia and North Korea. Analysts also noted that mixers received a total of more funds this year than ever before.

Chainalysis' report

A mixer is a service that allows you to mix cryptocurrencies with the assets of other users to enhance the confidentiality of transactions on the network. You can learn more about how such platforms work in an article by GetBlock Magazine's editorial staff.

What else does the report say? 50% of the illicit funds in crypto mixers are associated with the Russian darknet marketplace Hydra, which was blocked in April of this year. 30% came from the hacker group Lazarus, allegedly linked to the North Korean authorities.

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Another 18% came from the Blender.io mixer, which fell under US sanctions in May 2022. The service was used by Lazarus to launder funds stolen from the Ronin Network's sidechain, the US claims. In total, North Korean hackers funneled $20,5 million through Blender.io.

In June, hackers sent $36 million stolen from the Horizon Bridge hack on the Harmony Network to a Tornado Cash mixer. Elliptic analysts suggested that Lazarus was also behind the incident. A total of $100 million in cryptocurrency was stolen as a result of the hack.

In the US, mixers fall under the definition of money transmitters and must register with the Financial Crimes Enforcement Agency (FinCEN) under the Bank Secrecy Act (BSA), as well as implement anti-money laundering measures.

Chainalysis experts acknowledge that there are valid reasons for the use of mixers, such as the strict policies of the authorities in certain countries or the execution of legitimate transactions requiring confidentiality. However, the basic function of mixers, combined with the fact that none of such services have implemented Know Your Customer and anti-money laundering (KYC/AML) measures, makes them attractive to cybercriminals, analysts added.