Cryptocurrencies have seen massive gains in 2021. But, cybercriminal attacks, illicit use of cryptos, and money laundering have also reached record heights in the blockchain space. Cybercriminal groups laundered 30% more crypto last year compared to the previous one, according to data on Wednesday from Chainalysis.

The Chainalysis Money Laundering Crypto Crime report illustrated that $8.6 billion worth of cryptos was laundered in 2021 alone, surging 30% from the previous year. 

Money laundering is one of the hottest trends in crypto-related crimes according to Chainalaysis. The model is becoming widely adopted by cybercriminals to obscure the source of their funds. In an interview with Insider, Chainalysis said that the start of January saw crypto-related crime soar 80% in 2021.

Nonetheless, money laundering only amounts to 0.05% of all cryptos transaction volume last year, the same report showed.

In total, cybercriminals have laundered around $33 billion worth of cryptos since 2017, said Chainalysis. Most of the laundered money went through centralized exchanges. However, since 2018, “centralized exchanges didn't receive the majority of funds being sent by illicit addresses”, according to the Insider. 

Chainalysis further added that 47% of laundered crypto went to decentralized exchanges and Decentralized Finance (DeFi) platforms. DeFi applications accounted for about $900 million worth of crypto money laundering in 2021. The figure represents a 1,964% year-over-year increase.

Chainalysis 2022 Crypto Crime Report

Kim Grauer, head of research at Chanalysis said in an interview that blockchains are cybercriminals' favorite playing ground since DeFi protocols and their smart contracts which govern the network facilitates the task for them.

"A lot of the code that is writing these protocols is public and open-sourced," she told Insider. "So anyone can go over them and look for bugs in the code that they can then exploit."

How cybercriminals use DeFi To cover their tracks

By analyzing the Spartan Protocol hack — which resulted in hackers stealing over $30 million sparta tokens, fraudsters then converted the tokens into Ethereum and Bitcoin composites. Hackers then moved the cryptos from the hacked blockchain to the Bitcoin blockchain.

By relying on DeFi protocols meant for cross-chain transactions — moving from one blockchain to another — the hacker moved the anyEth to the Ethereum blockchain and then sent his funds to a decentralized exchange before using Tornado Cash to wash the funds.

These techniques have been becoming more popular in 2021. Last week, Crypto.com saw a major hack, and once again the Tornado Cash was used to shadow the transactions.