Crypto Laundering on Centralized Exchanges Declines: New Report Finds

The latest assessment from Chainalysis shows a marked shift in how illicit funds move within the crypto ecosystem. Centralized exchanges, once a primary conduit for laundering, are seeing their role diminish as informal, Chinese-language service networks expand their reach through laundering-as-a-service models. The report, published this week, details a landscape where money mules, informal over-the-counter desks, and gambling platforms are used to mix and route funds, bypassing traditional on-ramps and scrutiny. The trend sits within a broader growth in on-chain laundering, highlighting the continuous evolution of crypto crime even as regulators tighten rules around exchanges and custodians. In 2025, the on-chain laundering ecosystem reportedly processed more than $82 billion in illicit funds, a striking rise from roughly $10 billion in 2020, underscoring both rising liquidity and the persistent gap between crypto crime and enforcement capabilities.
Key takeaways

Chinese-language networks now account for about 20% of tracked illicit crypto funds, aligning with a wider migration away from centralized venues as exchanges gain the ability to freeze funds.
Inflows to identified Chinese-language laundering networks have surged dramatically since 2020, growing 7,325 times faster than inflows to centralized exchanges.
In 2025 alone, illicit funds laundered on-chain reached an estimated $82 billion, with Chinese-language networks responsible for roughly $16 billion of that total (~$44 million per day).
The laundering ecosystem is increasingly accessible, with crypto’s liquidity and adoption fueling new methods—telegram-based services and informal desks are highlighted as key facilitators.
Law-enforcement capacity building is emphasized as crucial, calling for upskilling and better information sharing to disrupt on-chain laundering networks.
Despite progress in centralized-exchange controls, the shift toward on-chain and service-based laundering reflects a broader regulatory and enforcement challenge across borders.

Market context: The findings come as regulators worldwide tighten crypto-asset rules and exchanges strengthen KYC/AML controls, yet illicit actors adapt by exploiting on-chain rails and informal channels. The shift reinforces the importance of on-chain analytics and cross-border cooperation as tools to curb crypto-enabled crime.
Why it matters
The Chainalysis report is a sobering reminder that the crypto-crime landscape is not static. While centralized exchanges have made meaningful strides in customer checks and security, the rise of Chinese-language networks signals a pivot toward less-regulated, on-chain pathways. The fact that these networks now account for a meaningful share of illicit flows—despite increased exchange scrutiny—illustrates how crime-adjacent actors exploit the friction between regulation and innovation. The magnitude of 2025’s on-chain laundering, pegged at more than $82 billion, underscores the scale of the problem and the urgency for robust global coordination among law enforcement, policymakers, and the private sector.
Experts interviewed by Chainalysis describe a persistent gap between criminal capabilities and enforcement capacity. Tom Keatinge of the Royal United Services Institute argues that many countries lack a parallel development of crypto-tracing skills within law enforcement, a deficiency that hampers disruption efforts. He notes that while private sector analytics providers have helped in specific cases, the real-world need is a systemic upgrade of investigative capabilities and cross-border information sharing. The report therefore frames upskilling as not merely a technical issue but a strategic one, essential to counter the nimble and persistent laundering networks that now dominate a large portion of on-chain activity.
What to watch next

Regulatory developments that expand cross-border information sharing and harmonize AML standards for crypto service providers.
Law-enforcement training programs and joint task forces aimed at dismantling laundering-as-a-service operations and advertising venues.
Advances in on-chain tracing tech and analytics that can attribute laundering flows more precisely to networks and facilitators.
Policy updates on the treatment of Chinese-language service channels and Telegram-based networks in enforcement actions.
Potential enforcement cases that target money-mules, OTC desks, and gambling platforms implicated in laundering networks.

Sources & verification

Chainalysis: 2026 crypto money laundering report and accompanying status updates, including on-chain flow analyses and network-specific findings.
Chainalysis discussion of laundering dynamics via Chinese-language Telegram-based services and other informal channels.
Related materials cited in the report, including regulatory and enforcement context and expert commentary from policy think tanks.

Chinese-language laundering networks reshape on-chain crime
Chainalysis’s latest research paints a clear picture: as exchanges intensify their compliance regimes, illicit actors are increasingly leveraging non-traditional routes to move and conceal funds. The Chinese-language networks—anchored in informal service-based models—have built out infrastructures that resemble “laundering-as-a-service,” drawing on money mules, OTC desks operating outside formal compliance regimes, and gambling platforms used to mix and route illicit funds. These networks did not appear overnight; they matured in the COVID-era environment that facilitated remote coordination and new digital-adoption patterns. Since then, they have grown to dominate known on-chain money-laundering activity, becoming a formidable force in the global crypto crime ecosystem.
One of the most striking metrics in the report is the share of illicit flows attributed to these Chinese-language networks. Roughly one-fifth of tracked illicit crypto funds are associated with these channels, a testament to their reach and persistence. This rise comes at a time when international efforts to police crypto activity are intensifying. Centralized exchanges, long the workhorse for compliant crypto trading, have tightened monitoring and built stronger controls. Yet the networks described in the Chainalysis study illustrate a contrasting, more diffuse approach to laundering—one that leverages low-friction channels, informal desks, and a distributed advertising ecosystem to recruit participants and move funds across borders.
In numerical terms, the growth story is compelling: inflows to identified Chinese-language laundering networks have surged at a pace that dwarfs that of centralized exchanges. Since 2020, inflows to these networks have expanded 7,325 times faster than inflows to centralized exchanges—an asymmetry that highlights how quickly illicit actors can adapt to changing regulatory environments. The implication is not only about the scale of illicit funds moving through these channels but also about the speed at which their operational models can pivot in response to enforcement pressure.
Beyond the raw figures, the report emphasizes shifts in the mechanics of on-chain laundering. While not discounting the role of traditional laundering endpoints, Chainalysis notes a broader ecosystem in which on-chain mixing services, mule networks, OTC desks, and gambling platforms together form a complex web that can obfuscate provenance and destination of funds. The accessibility and liquidity of crypto assets fuel this ecosystem, enabling rapid movement, layering, and swapping across multiple wallets and chains. The trend underscores the need for more sophisticated cross-chain analytics and heightened collaboration between regulators, exchanges, and law-enforcement agencies to disrupt such networks at multiple points of exposure.
The discussion also underscores a practical policy takeaway: law enforcement must be equipped with enhanced capabilities and better information-sharing mechanisms. As Tom Keatinge suggested, the gap between criminals’ crypto usage and authorities’ investigative prowess remains a critical vulnerability. Private-sector tracing tools have proven useful in some cases, but the real-time, global-scale disruption of these laundering networks requires a concerted, systemic effort. The call is for a holistic upgrade of capabilities—from workforce training to interoperable data-sharing protocols—that can translate analytics into actionable enforcement outcomes.
Against this backdrop, the crypto industry, regulators, and researchers are likely to maintain a careful balance between enabling legitimate financial activity and curbing illicit flows. The rise of Chinese-language laundering networks does not necessarily indict the asset class as a whole; rather, it highlights the importance of robust compliance, transparent reporting, and continued investment in enforcement-relevant capabilities. The report’s findings invite policymakers to consider more nuanced, globally coordinated responses that can adapt to evolving laundering strategies without stifling legitimate innovation.
As the ecosystem continues to evolve, stakeholders should monitor indicators such as shifts in flow volumes by language regions, the emergence of new informal service clusters, and the effectiveness of cross-border information-sharing initiatives. The coming years will likely reveal whether intensified regulatory regimes and advanced analytics can meaningfully compress the playbook of these laundering networks or whether adaptivity will maintain their foothold in the on-chain crime landscape.
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