$100B Illegal Crypto Surge Hits Stablecoins, Exchanges!

Key Points:

• JPMorgan predicts a significant rebound in the crypto market for August, anticipating an end to liquidation activities.
• The forecast offers strategic insights for investors looking to capitalize on potential market recovery and stability.

Chainalysis researchers indicate that nearly $100 billion in illegal crypto surge funds have been laundered through dark pools of digital wallets since 2019.

According to Kim Grauer, head of research at Chainalysis, criminals are unprecedentedly rinsing stablecoins for illegal crypto surge transactions. More than half of these suspicious funds eventually enter centralized exchanges, offering them high liquidity, ease of conversion between cryptocurrencies and fiat currencies, and deep integration with traditional financial systems—making them ideal for laundering illegal crypto surge funds.

Impact on Global Exchanges Revealed

Research also identified the source of illicit money flows, which range from dark web markets through ransomware and malware to fraudulent schemes. Chainalysis identified five large centralized exchanges as key hubs for illegal crypto surge fund activities, although it refrained from naming particular exchanges. In addition to traditional exchanges, criminals use decentralized financial services, gambling sites, cryptocurrency mixers, and blockchain cross-chain bridges to conceal illegal funds’ origin.

On the bright side, Grauer pointed out that tighter regulations and exchange vigilance reduced suspicious fund inflows from their peak of close to $2 billion per month to just around $780 million monthly.

Chainalysis has tracked an increase in the number of intermediate digital wallets hosted by exchanges that follow Know Your Customer principles; these are wallets that, in essence, serve as a sort of financial laundry system to drive money through them and conceal its illicit origin, a method for avoiding detection.