Cryptocurrency has long been promoted as a technological innovation that would democratise finance, reduce friction and increase transparency. The reality appears to be far less optimistic. Recent data indicates that crypto has become a highly efficient, industrial-scale money laundering infrastructure and one that is growing faster than regulators can effectively manage.

According to new findings from blockchain analytics firm Chainalysis, criminals laundered at least $82 billion through cryptocurrencies in 2025, up from just $10 billion in 2020. This is not incremental growth. It represents an essential shift in how organised crime, fraud networks, and sanctions evaders move money globally.

VinciWorks has long maintained that there is little legitimate use for cryptocurrency that outweighs its financial crime risks and any exposure to crypto should automatically trigger enhanced due diligence, if not outright avoidance.

The rise of Chinese-language money laundering networks

The most striking development in the latest data is the dominance of Chinese-language money laundering networks (CMLNs). These networks emerged during the COVID-19 pandemic and now account for approximately 20% of all known illicit crypto laundering activity worldwide.

In 2025 alone:

• CMLNs processed $16.1 billion in illicit crypto
  
• That equates to roughly $44 million per day
  
• Activity flowed through 1,799 identified wallets, with analysts warning this is likely an underestimate
  

Since 2020, inflows to these networks have grown over 7,000 times faster than illicit flows into centralised exchanges. Criminals are deliberately avoiding venues where funds can be frozen or traced by regulated entities.

This is not opportunistic crime. These are professional, resilient, cross-border laundering operations that openly advertise services, use escrow-like “guarantee platforms,” and operate with a level of sophistication comparable to legitimate financial institutions.

“Transparency” on the blockchain is a myth

Crypto advocates often argue that blockchain transparency makes crypto safer than cash. In theory, transactions are visible. In practice, identifying who controls a wallet is exceptionally difficult, particularly when criminals use:

• Telegram-based laundering marketplaces
  
• Over-the-counter (OTC) brokers
  
• Money mule networks
  
• Decentralised exchanges and cross-chain bridges
  
• Transaction fragmentation (“smurfing”) and consolidation techniques
  

Chainalysis has identified six distinct service types within the CMLN ecosystem, ranging from brokers and OTC desks to gambling-linked services and “Black U” vendors who openly sell tainted crypto at discounted rates.

Guarantee platforms such as Huione and Xinbi function as aggregation hubs, offering escrow services and reputation systems for laundering vendors. While enforcement actions have disrupted some platforms, the networks simply migrate elsewhere, often within days.

As Chainalysis notes, enforcement can be disruptive, but the core networks persist.

A global regulatory blind spot

Crypto remains less specifically regulated than mainstream finance in many jurisdictions and criminals exploit this gap ruthlessly.

Despite crypto trading being banned in China, authorities there prosecuted over 3,000 people for crypto-related money laundering in 2024 alone. Meanwhile, Western enforcement agencies have issued sanctions, advisories, and designations against major laundering facilitators including actions by OFAC, OFSI, and FinCEN.

Yet the underlying problem remains that crypto laundering networks are global, while regulation and enforcement remain fragmented and national.

As one expert cited by Chainalysis observed, these networks benefit from national legal boundaries, poor cross-border information sharing, limited asset recovery capabilities and inconsistent crypto tracing expertise. The result is a low-risk, high-reward environment for criminals and an increasingly dangerous one for regulated firms that underestimate their exposure.

Crypto should be treated as inherently high risk

While some organisations attempt to justify crypto exposure through innovation narratives or client demand, the data tells a different story. Crypto is not merely used by criminals. It is now designed around their needs via its speed, anonymity, cross-border reach, and weak oversight.

For compliance teams, this has practical implications:

• Crypto exposure should never be treated as routine
  
• Any involvement should trigger enhanced due diligence as a baseline
  
• Source of funds explanations involving crypto should be treated with scepticism
  
• Transaction monitoring assumptions used in traditional finance do not translate to crypto
  
• “Reputable platforms” and “well-known tokens” do not meaningfully reduce risk
  

In many cases, the most defensible risk decision will be not to engage at all.

What this means for compliance teams

The scale and professionalisation of crypto laundering should fundamentally change how organisations think about risk. This is no longer a niche concern for exchanges or fintechs. Crypto exposure now appears in fraud and scam proceeds, sanctions evasion, corruption and organised crime, cybercrime and ransomware and cross-border capital flights.

Compliance frameworks cannot treat crypto as just another payment method. As regulators increasingly expect firms to anticipate emerging risks, ignoring crypto’s role in global money laundering is becoming indefensible.

The data is clear. Crypto money laundering has grown from $10 billion to $82 billion in five years, with Chinese-language networks operating at a scale once associated only with major financial institutions. This is not innovation. It is infrastructure for crime.

For organisations serious about financial crime prevention, the safest assumption is that crypto always equals high risk. Enhanced due diligence is the minimum. In many cases, walking away could be the most responsible option.

Our AML Fundamentals course in cryptocurrency provides an overview of money laundering, explains how cryptocurrency could inadvertently be used in the money laundering chain, and who to contact in the event of any suspicions. Try it here.