The Dark Side of Crypto - Money Laundering

The Dark Side of Crypto - Money Laundering

When you heard the term “Bitcoin” about a decade ago, it was mainly associated with the illicit activity from within the dark web. As an extremely viable way to exchange currency with anonymity, it’s no wonder why malicious individuals utilized the digital space to transact.

Today, less than 1% of Bitcoin transactions are used for illicit activities across both the centralized and decentralized web. In 2012, that number was 35%. This is due to the security measures adopted by several institutions, including crypto foundations themselves, financial institutions, and regulators.

Although only 1%, that small percentage still means it happens today. In this blog, we will be taking a look at one of the most popular malicious activities seen within that 1%… money laundering.


If you’re unaware of what money laundering is, to begin with, it’s the act of exchanging large amounts of funds obtained from illegal activities and making it appear to be received from a legitimate source. The same goes for cryptocurrencies.

The ability to launder cryptocurrency is made a lot easier than fiat currency due to the fact that each crypto transaction is relatively anonymous. You’re met with an address with different letters and numbers with no personal information exposed. Universally unprotectedand unregulated, the crypto world is the go-to platform for shady individuals looking to perform illegal activity. No… not everyone who uses crypto is a criminal!


Since anonymity is key in cryptocurrency, it makes it difficult to see exactly who you’re sending money to or receiving money from. Money launderers utilize this to move funds from multiple different wallets into one main wallet. The frequency of transactions is something to note, as they are able to perform these transactions within seconds of each other.

Once received, they generally move these funds to areas where jurisdiction is unregulated. This helps ensure their dirty digital money will be safe once they reach their final destination. Since these two things are happening at a high volume all at once between different wallets, it makes it hard to trace where the money originally came from. This can be referred to as using a tumbler.

A platform that contributes to this heavily would be gambling and gaming sites. On these websites, you’re able to either buy or receive your crypto on the site and use it to gamble or play games. Users participating in the platform are able to cash out their earnings into their own wallets. This allows malicious individuals to send their dirty money out and receive a cleaner crypto slate in return.


With anything, there’s always going to be at least one bad egg taking advantage of the system in front of them. This doesn’t account for all users as a whole, but it’s interesting to learn about the methods of crypto laundering and how it’s performed.

As a reminder, and I’m sure you all already know, money laundering is illegal both in the physical world and the digital world. Platforms that are unregulated don’t make it any less illegal. I highly advise you to stay away from acting in this space yourself unless you’re trying to track down a money launderer yourselves!

Thanks so much for reading my blog today!
Stay tuned for more!


I also posted this blog on my LeoFinance page here!

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