Crypto Crime’s Secret Bottleneck

Crypto Crime’s Secret Bottleneck: How Just a Handful of Addresses Launder Billions

In a world where crypto criminals move billions across blockchains, you might imagine a complex web of untraceable transactions. But here’s the twist: just a handful of deposit addresses handle the lion’s share of illicit crypto funds.

In 2023, seven crypto addresses handled 51% of all funds from illegal content vendors. Nine addresses processed 50.3% of all ransomware proceeds.

This shocking centralization is one of the best-kept secrets in crypto crime. For all its chaos and fragmentation, the illicit crypto economy relies on a very small number of critical exit points—and that changes everything about how we think about tracking, intercepting, and preventing money laundering.

How Crypto Money Laundering Works

Much like traditional financial crime, crypto money laundering follows a playbook:

1. Placement: Criminals gather illicit earnings (from hacks, scams, or crime) and move them into the crypto ecosystem via exchanges.

2. Layering: They convert crypto across multiple tokens and platforms, often using mixers, bridges, and DEXs to obscure the trail.

3. Integration: Finally, the “cleaned” crypto is reintroduced into the legal economy—via real estate, business investments, luxury goods, or OTC trades.

The Infrastructure Behind Digital Laundering

Criminals use a mix of old and new methods to wash dirty money:

• Non-compliant centralized exchanges that look the other way

• Decentralized exchanges (DEXs) with no KYC or AML checks

• Mixers like Tornado Cash to blur transaction trails

• Crosschain bridges to hop across blockchains undetected

• Online gambling platforms that legitimize illicit funds

• Nested services and OTC brokers who trade crypto off-chain with anonymity

In 2023 alone, crypto wallets tied to criminal activity moved $22.2 billion worth of assets. In 2022, that number was $31.5 billion.

The Myth of Decentralized Chaos

Despite the noise about anonymity and decentralization, the reality is that most laundering funnels through a concentrated set of actors:

• In 2023, 109 crypto deposit addresses each received more than $10 million in illicit crypto.

• These few addresses accounted for over $3.4 billion in laundered funds.

Ransomware gangs and illegal content vendors don’t need sprawling laundering networks—they need access to these key deposit points. This creates choke points that regulators and law enforcement can target.

Why This Matters for Regulators and Platforms

This concentration is both a threat and an opportunity. The threat? If these addresses go unchecked, billions in dirty money continue to flow. The opportunity? Focusing enforcement on a small number of high-risk addresses could disrupt a major portion of illicit flows.

That means:

• Exchanges must be proactive in monitoring large, suspicious deposits

• Blockchain analytics firms should track address clusters, not just tokens

• Regulators can prioritize resources where they matter most

The Bigger Picture: Compliance in an Evolving World

As countries like Kenya, India, and others in Africa and Southeast Asia accelerate crypto adoption, they’re also at risk of becoming conduits for these flows.

Without strong KYC, sanctions screening, and transaction monitoring, exchanges and platforms in emerging markets could be unknowingly helping criminals cash out.

At Anqa Compliance, we’re building affordable, mobile-first tools that give financial platforms and regulators the power to:

• Digitally onboard users with smart eKYC

• Screen against global and domestic watchlists in real time

• Assess customer risk based on geography, delivery channels, and profile

• Maintain audit trails and manage compliance cases efficiently

• Integrate compliance workflows via API or in low-bandwidth environments

At Anqa Compliance, we’re building affordable, mobile-first tools that give financial platforms and regulators the power to:

• Screen wallets in real time

• Flag suspicious transactions tied to known laundering hubs

• Track behavioral risk, not just identity

Because the best way to stop money laundering isn’t with more noise—it’s by focusing on the bottlenecks.

Want to learn how Anqa helps crypto businesses and regulators fight back?

👉 Visit www.anqacompliance.com or reach out for a free demo.

Sources: 2024 Crypto Crime Report, Chainalysis. U.S. Department of Justice. Microsoft Threat Intelligence.