Crypto‑Laundering Shifts Away From Centralised Exchanges, Chinese‑Language Networks Take the Lead, Chainalysis Finds
July 30 2024 – Cointelegraph – A new study from blockchain analytics firm Chainalysis shows a noticeable drop in the use of centralized cryptocurrency exchanges (CEXs) for moving illicit proceeds, while informal “laundering‑as‑a‑service” (LaaS) operations conducted in Chinese‑language channels have surged to become the dominant conduit for on‑chain money‑laundering activity.
Declining Role of Centralised Platforms
The report, published on Tuesday, attributes the decrease in CEX‑based laundering to heightened compliance regimes and the growing ability of exchanges to freeze suspicious assets. Over the past five years, the proportion of tracked illicit crypto values funneled through major exchanges has fallen steadily, a trend the authors link to tighter global regulatory standards and the rollout of more robust KYC/AML checks across the sector.
Rise of Chinese‑Language LaaS Networks
In contrast, informal networks that operate primarily on Mandarin‑speaking messaging apps have expanded dramatically. These groups—often organized through Telegram and other chat services—offer a suite of services that include employing “money mules,” arranging over‑the‑counter (OTC) swaps, and leveraging gambling platforms to obscure the origin of funds.
Chainalysis estimates that these Chinese‑language networks have handled roughly one‑fifth of all flagged illicit crypto flows in the last half‑decade. Their growth rate outpaces that of traditional exchange‑based laundering by a factor of more than 7,000 since the start of the COVID‑19 pandemic, effectively reshaping the on‑chain laundering landscape.
Scale of the On‑Chain Laundering Ecosystem
The analytics firm also notes that the total volume of illicit crypto moved on the blockchain surged from about $10 billion in 2020 to over $82 billion in 2025. Of that, approximately $16 billion—equivalent to an average of $44 million per day—was processed by the Chinese‑language LaaS clusters. The authors point to broader cryptocurrency adoption and improved liquidity as key drivers of this expansion.
Implications for Regulators and Law‑Enforcement
The shift away from centralized exchanges poses new challenges for authorities. Traditional enforcement tactics that target exchange wallets or rely on exchange‑level reporting are less effective when funds are routed through decentralized, peer‑to‑peer services that lack a formal compliance framework.
Tom Keatinge, director of the Centre for Finance & Security at the Royal United Services Institute, warned that many jurisdictions still lag behind criminal groups in terms of crypto expertise. He emphasised the urgent need for a coordinated global effort to raise the technical capabilities of law‑enforcement agencies and to improve information‑sharing mechanisms across borders.
Key Takeaways
| Insight | Detail |
|---|---|
| CEX laundering declines | Strengthened KYC/AML and the ability of exchanges to block assets have reduced their use for illicit transfers. |
| Chinese‑language networks dominate | These informal LaaS structures now account for roughly 20 % of tracked illicit crypto and are growing thousands of times faster than CEX pathways. |
| Illicit volume hits $82 bn | On‑chain laundering rose more than eight‑fold between 2020 and 2025, driven by broader crypto accessibility. |
| $16 bn routed through Chinese‑language services | This translates to about $44 million a day, highlighting the scale of the emerging threat. |
| Law‑enforcement upskilling required | Experts call for a systematic, global push to equip investigators with crypto‑forensics skills and better cross‑jurisdictional cooperation. |
Outlook
If the current trajectory continues, informal, language‑specific laundering networks are likely to retain a disproportionate share of the illicit on‑chain economy, even as regulators tighten controls on traditional exchanges. Stakeholders—from exchanges to policy‑makers and investigative bodies—will need to adapt their strategies to address a more fragmented and technically sophisticated laundering ecosystem.
The article is based on Chainalysis’ “2026 Crypto Money Laundering” report and reflects analysis from independent sources. Readers are encouraged to consult the original data and verify information independently.
Source: https://cointelegraph.com/news/crypto-launderers-are-turning-away-from-centralized-exchanges-chainalysis?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
