Technology

Money laundering within DeFi up by 263% says industry study

Recent analysis of the DeFi sector carried out by CryptoMonday shows that money laundering in the sector has grown by 263% in the first two quarters of 2022. At press time, DeFi protocols have been conduits of up to 69% of funds associated with illicit activity, a significant upsurge from 19% in 2021. “Bad actors are showing a growing preference for Defi protocols in executing their nefarious plans,” affirms CryptoMonday’s CEO Jonathan Merry. He adds, ” While illicit activity within the entire crypto ecosystem has significantly decreased, it’s in the ascendency within the Defi space. The sector seems to be going through the same teething challenges that crypto faced a while back which explains that uptick in the last couple of years.” This vice takes two major forms: stealing funds through exploits and misusing DeFi protocols to launder funds. So why has there been this uptick? The first reason is that Defi protocols are wholly decentralised. That means that they allow for peer-to-peer (P2P) trading of cryptos, making tracking transactions difficult. Secondly, unlike centralized exchanges (CEXs), Defi platforms don’t stress on Know Your Customer (KYC) information. Thus they are attractive to criminals looking to obscure their exchanges.

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