Cryptocurrency Laundering
What is Cryptocurrency Laundering?
Cryptocurrency LaunderingThe process of obscuring the origin of cryptocurrency obtained from crime by moving it through mixers, chain-hopping, and exchanges before cashing out into fiat.
Cryptocurrency laundering applies traditional placement-layering-integration money-laundering stages to on-chain assets. Attackers from ransomware, theft, scams, or sanctions-evading actors push stolen crypto through privacy-enhancing services. Common techniques include mixers and tumblers (Tornado Cash, Sinbad), chain-hopping across bridges to assets like Monero or stablecoins, peeling chains of small transfers, and laundering through nested exchanges or OTC desks. The US Treasury sanctioned Tornado Cash in 2022 for laundering more than USD 7 billion, including from the Lazarus Group's Ronin Bridge heist. Defences combine on-chain analytics (Chainalysis, TRM, Elliptic), exchange KYC and travel rule compliance, FATF guidance, and law-enforcement seizure of mixers and infrastructure.
● Examples
- 01
Lazarus Group laundered USD 625M from the 2022 Ronin Bridge hack via Tornado Cash and other mixers.
- 02
Bitzlato exchange and Sinbad mixer were sanctioned and seized in 2023 for processing ransomware proceeds.
● Frequently asked questions
What is Cryptocurrency Laundering?
The process of obscuring the origin of cryptocurrency obtained from crime by moving it through mixers, chain-hopping, and exchanges before cashing out into fiat. It belongs to the Attacks & Threats category of cybersecurity.
What does Cryptocurrency Laundering mean?
The process of obscuring the origin of cryptocurrency obtained from crime by moving it through mixers, chain-hopping, and exchanges before cashing out into fiat.
How does Cryptocurrency Laundering work?
Cryptocurrency laundering applies traditional placement-layering-integration money-laundering stages to on-chain assets. Attackers from ransomware, theft, scams, or sanctions-evading actors push stolen crypto through privacy-enhancing services. Common techniques include mixers and tumblers (Tornado Cash, Sinbad), chain-hopping across bridges to assets like Monero or stablecoins, peeling chains of small transfers, and laundering through nested exchanges or OTC desks. The US Treasury sanctioned Tornado Cash in 2022 for laundering more than USD 7 billion, including from the Lazarus Group's Ronin Bridge heist. Defences combine on-chain analytics (Chainalysis, TRM, Elliptic), exchange KYC and travel rule compliance, FATF guidance, and law-enforcement seizure of mixers and infrastructure.
How do you defend against Cryptocurrency Laundering?
Defences for Cryptocurrency Laundering typically combine technical controls and operational practices, as detailed in the full definition above.
What are other names for Cryptocurrency Laundering?
Common alternative names include: Crypto money laundering, On-chain laundering.
● Related terms
- malware№ 900
Ransomware
Malware that encrypts a victim's data or locks systems and demands payment in exchange for restoring access.
- attacks№ 509
ICO Scam
A fraudulent Initial Coin Offering in which the issuers raise cryptocurrency from investors based on false promises and disappear or collapse after the sale.
- attacks№ 728
NFT Fraud
Any scheme that exploits the NFT market to defraud buyers or creators, including rugpulls, wash trading, plagiarism, and wallet-draining smart contracts.
- attacks№ 823
Pig Butchering Scam
A long-running romance and investment scam in which criminals build a relationship with the victim, then steer them into a fake cryptocurrency platform that ultimately steals all deposits.