## The Lengthy Path of Digital Assets to Validity: Money Laundering Remains a Problem – What Awaits?
Regardless of Bybit CEO Ben Zhou’s declaration that 88% of misappropriated digital currency can be tracked, the latest Bybit breach is generating considerable anxieties regarding a rise in digital currency-linked money laundering. Is this an escalating pattern? Let’s explore.
Recall when BlackRock’s Larry Fink described digital currency as an “indicator of money laundering” in 2017? Progressing five years, Fink is expressing a different opinion, accepting Bitcoin. BlackRock’s iShares Bitcoin Trust currently possesses in excess of 570,000 BTC, overshadowing other participants. BlackRock commenced befriending Bitcoin in 2022, the identical year Chainalysis information reveals digital currency’s application in illicit endeavors reached its apex, with money laundering approximated at an astounding $54 billion and $31 billion correspondingly.
## Where Did the Misappropriated Assets End Up?
On March 20th, Bybit’s Ben Zhou communicated via tweet that over 88% of the assets misappropriated in the February Bybit breach were still trackable, whereas 7.59% had “disappeared.” The remainder? Immobilized.
Zhou’s communication explicitly singled out digital currency mixers employed to launder the assets, prompting bounty pursuers to aid in deciphering the mixer transactions and recuperating the stolen goods.
According to Zhou, the assets were channeled through Wasabi, TornadoCash, Railgun, and Crypto Mixer. Certain transactions were subsequently exchanged through P2P platforms. Bybit had earlier incriminated eXch of permitting criminals to utilize their platform to purify the misappropriated assets, accusations eXch representatives refute.
Elliptic labeled the Bybit breach as one of the most substantial digital currency robberies ever and associated it with the Lazarus Group, a North Korean-supported hacking entity. Allegedly, the Lazarus Group’s digital currency robberies furnish Pyongyang with 40% of the assets necessitated for its nuclear initiative. Canary Capital Requests ETF, PENGU Value Increases
Zhou opines that deciphering the mixer transactions is the “paramount concern.”
It remains uncertain how probable it is that we will be able to completely decipher transaction information going forward. What we do understand is that the utilization of cross-chain bridges is undoubtedly increasing.
Law enforcement initiatives appear to have contributed to the comparative decrease in mixer usage following its peak in 2022. Nevertheless, if we reflect on the 2010s, we can observe a consistent escalation in the quantity of mixers and cross-chain bridges employed by crypto offenders. Chainalysis emphasizes that crypto-related crime has become progressively varied and specialized recently.
While total crypto transaction volume diminished by 15% in 2023, the quantity of crypto being laundered essentially decreased by approximately 30%. It’s challenging to ascertain if this constitutes a genuine favorable alteration, though. According to Chainalysis, the overall illicit utilization of crypto has remained comparatively consistent at around $50 billion annually in 2022, 2023, and 2024. In 2022, the quantity of crypto laundered surged to $31.5 billion, subsequently declining to $22.2 billion in 2023. However, that’s still notably elevated compared to pre-2021 levels. Data indicates that the quantity of crypto laundered almost amplified in 2021 relative to 2020 or 2019, attaining $18.3 billion, up from $9.9 billion to $11.1 billion in those prior years. Europol conveys that the COVID pandemic signified the commencement of a surge in crypto money laundering, as the quantity of crypto transactions also augmented. Indeed, Europol deems money laundering to be a fundamental criminal application of cryptocurrency.
Just recently, on March 20th, Arkham Analytics disclosed that 12.9 BTC from the Bybit breach was dispatched to an unidentified address. While there exist methods to attempt and decipher these obscured transactions, it’s premature to determine if they’ll be efficacious in the Bybit instance.
In the period spanning from 2019 to 2023, a scant handful of traditional currency conversion techniques constituted about a third of all virtual currency illicit finance activities.
Are digital currency tumblers, anonymity-focused coins, and analogous instruments genuinely at fault?
For quite some time, the digital currency collective has united in support of programmers confronting legal action for devising instruments that obscure the route of pilfered digital currency, such as the masterminds behind Tornado Cash and Samourai Wallet. Echoing their persistent appeals for clemency for Ross Ulbricht, they are currently championing William Lonergan and Keonne Rodriguez of Samourai, alongside Roman Storm of Tornado Cash.
Advocates contend that the act of crafting open-source instruments possessing both lawful and unlawful uses does not inherently constitute a transgression and ought not to be construed as complicity in offenses perpetrated by external entities. As articulated by digital currency attorney Marta Belcher:
“The mere fact that a technology *can* be exploited for illicit purposes does not ipso facto render the technology inherently problematic. Felons utilize cash, yet we refrain from proscribing cash. We do not attribute culpability to Ford when their automobiles are employed as escape conveyances in financial institution heists.”
Nevertheless, as of 2025, legal representatives are progressively channeling their endeavors toward holding programmers liable for the creation of instruments advantageous to malefactors. By way of illustration, Samourai’s originators confront a potential incarceration of up to 25 years due to their platform’s utilization for illicit finance activities by Silk Road and Hydra Market. While a reprieve for Ross Ulbricht might portend a transformation in established norms, it remains premature to definitively characterize it as a tangible alteration.
