Crypto Funds Funneled To Money Launderers Hit $82 Billion, According To Chainalysis

Overview

A recent report by blockchain analytics firm Chainalysis has revealed a significant increase in crypto-based money laundering activities, particularly involving Chinese-language money laundering networks. These networks are emerging as a serious threat in the digital asset ecosystem, with illicit activities projected to escalate dramatically in the coming years.

The Rise of Chinese-Language Networks in Crypto Crime

Chainalysis’s report indicates that the scale of illicit on-chain money laundering has surged over the past five years. In 2020, the estimated amount of crypto-related laundering was around $10 billion. By 2025, this figure is expected to exceed $82 billion. A notable factor contributing to this rapid growth is the rise of Chinese-language money laundering networks, commonly referred to as CMLNs. By 2025, these networks were responsible for approximately 20% of all identified illicit crypto laundering activities.

The report highlights that CMLNs are increasingly involved in laundering funds from scams, particularly those known as “pig butchering” scams. It is noted that these networks routinely launder over 10% of the funds stolen through such scams. The growth rate of inflows to identified CMLNs is striking, reportedly increasing 7,325 times faster than inflows to centralized exchanges. This growth has outpaced other laundering methods, with inflows to CMLNs expanding 1,810 times faster than decentralized finance platforms and 2,190 times faster than illicit on-chain flows remaining within criminal ecosystems.

While CMLNs are not the only entities engaged in crypto laundering, they dominate a significant portion of the global laundering activity attributed to cryptocurrencies. Chainalysis found that services based in Chinese-language and operating on platforms like Telegram account for a disproportionately large share of this activity.

Cross-Border Crime at Scale

The report further details the sophisticated operations of CMLNs, which function openly across various platforms and employ complex, multi-layered systems. These networks exhibit industrial-level processing capabilities and a high degree of technical sophistication. In 2025, Chainalysis identified six distinct service types that collectively comprise the CMLN ecosystem, processing a total of $16.1 billion in illicit inflows.

The number of active entities within these networks has also seen remarkable growth. From a limited number of wallets just a few years ago, the number of active on-chain wallets associated with CMLNs rose to over 1,799 in 2025. Experts in the field, such as Tom Keatinge from the Centre for Finance & Security, attribute the rapid evolution of these networks to converging global forces, noting that they have transformed into multi-billion-dollar cross-border operations.

Chris Urben, Managing Director at Nardello & Co, pointed out a significant shift in the methods employed by these networks, as they have moved away from traditional informal value transfer systems. Instead, these groups have increasingly adopted cryptocurrencies for a more efficient and discreet means of transferring funds across borders.

From author

The findings presented in the Chainalysis report underscore the escalating threat posed by CMLNs in the crypto landscape. The remarkable growth of these networks highlights the need for heightened scrutiny and regulatory measures to combat illicit activities in the digital asset space.

Impact on the crypto market

• The rise of CMLNs could lead to increased regulatory scrutiny on cryptocurrencies and their use in illicit activities.
• A significant portion of illicit inflows could undermine the legitimacy of the crypto market, affecting investor confidence.
• The growth of sophisticated laundering networks may prompt exchanges and platforms to enhance their compliance and anti-money laundering (AML) measures.
• The evolving landscape of crypto crime may lead to a reevaluation of security protocols within the industry.
• The increasing use of cryptocurrencies for cross-border crime could result in tighter international regulations and cooperation among jurisdictions.