Chainalysis: Criminals moved $34 million in crypto through DeFi in 2020

Quick Take

  • DeFi-related financial crimes made up less than 1% of the total DEX transaction volume
  • But the crime rate on DEXs are going to rise in 2021, according to Chainalysis’ Chief Scientist


Roughly $144.3 billion passed through decentralized exchanges (DEXs) in 2020, but not all transactions involved legally-obtained crypto.

Blockchain analysis firm Chainalysis estimates that about $34 million of decentralized finance (DeFi) transactions were conducted by criminal actors. 

Source: Chainalysis

The $34 million figure might not sound like a lot — it’s only 0.02% of the estimated DEX volume, after all. But that number remains significant because the frequency of such activity is expected to rise in 2021, wrote Chainalysis chief scientist Jacob Illum in a draft shared with The Block.

One factor in this numerical growth will be purely logistical — blockchain analytics firms like Chainalysis and Elliptic haven’t found all the crime-tied activity that occurred in 2020. As such, they're likely to uncover additional instances this year, as Chainalysis previously mentioned was the case with the PlusToken Ponzi scheme. The key events date back to 2019, but many of the key players weren’t identified until the following year. 


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Illum mentions another reason for the increased DeFi activity rate: because cybercriminals have taken note of DeFi’s smart contracts, which route funds into users wallets depending on the terms stipulated in the code. There's a lack of human oversight between transactions, and Illum argues that money laundering via DeFi will increase as a result. 

“The question that remains is whether the most popular platforms will be those where administrators retain enough control to prevent criminal transactions, as we saw in the KuCoin hack,” Illum wrote. 

The third is that dark markets, like Televend, are decentralizing. Televend uses encrypted automated chat bots on Telegram to connect more than 150,000 vendors to buyers. Buyers place orders on a vendor’s automated chat and then receive a BTC address generated by the bot. 

“Televend receives commissions on each sale, but never actually touches the funds, so there’s no central entity for law enforcement to track through blockchain analysis — the transactions blend in much more easily,” Illum wrote.  

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

MK Manoylov has been a reporter for The Block since 2020 — joining just before bitcoin surpassed $20,000 for the first time. Since then, MK has written nearly 1,000 articles for the publication, covering any and all crypto news but with a penchant toward NFT, metaverse, web3 gaming, funding, crime, hack and crypto ecosystem stories. MK holds a graduate degree from New York University's Science, Health and Environmental Reporting Program (SHERP) and has also covered health topics for WebMD and Insider. You can follow MK on X @MManoylov and on LinkedIn.