Chinese Crypto Laundering Networks Control 20% of Illicit Flows

The data from Chainalysis reveals a transformation in the mechanics of crypto-based crime. The total value of illicit on-chain money laundering has ballooned more than eightfold since 2020. At the heart of this surge are Chinese-language money laundering networks, which have grown at a pace that dwarfs all other laundering channels. Inflows to identified CMLNs have increased an astonishing 7,325 times faster than those to centralized exchanges, 1,810 times faster than decentralized finance (DeFi) protocols, and 2,190 times faster than transfers between other illicit wallets. This disproportionate growth has cemented their role, with CMLNs now accounting for roughly 20% of all known illicit crypto laundering activity.

The scale and sophistication of these networks have evolved dramatically. From a small group just a few years ago, the ecosystem now comprises over 1,799 active on-chain wallets. Chainalysis has identified six distinct service types within the CMLN framework, which collectively processed $16.1 billion in inflows in 2025 alone. The speed at which these services operate is a key indicator of their efficiency; the time required for each service type to process its first $1 billion from inception points to both rapid market capture and significant operational differences between the various laundering methods employed.

CMLNs are not passive intermediaries; they are integral to specific, high-value criminal schemes. Chainalysis reports that these networks now consistently launder more than 10% of the funds stolen through so-called ‘pig butchering’ scams—a type of long-term romance or investment fraud. This direct link to a major source of crypto theft underscores the specialized role these networks play in the criminal economy. Furthermore, on-chain transaction analysis shows that financial flows through CMLNs closely mirror the classic techniques of traditional fiat money laundering, specifically the ‘smurfing’ and aggregation phases where large sums are broken into smaller, less suspicious transactions before being pooled again.

The shift toward these specialized networks coincides with a steady decline in the use of centralized crypto exchanges for laundering. This is a strategic move by criminals, as centralized platforms are far more likely to freeze illicit funds when identified. Instead, criminals are leveraging the pseudo-anonymity and borderless nature of decentralized services and peer-to-peer networks, often coordinated through platforms like Telegram. These Chinese-language, Telegram-based services now represent a disproportionate and dominant share of the global on-chain laundering landscape, processing proceeds from a wide spectrum of both on-chain and off-chain criminal activities.

While CMLNs represent a significant and growing threat, they are not the only criminal networks adapting to cryptocurrency. The report notes the December 2024 dismantling by the United Kingdom’s National Crime Agency of a multi-billion-dollar Russian-language laundering operation that serviced cybercriminals, drug cartels, and elites. This parallel development points to a broader, systemic issue: the structural advantages crypto offers to organized crime on a global scale.

Experts highlight a profound capability gap that favors criminals. Tom Keatinge, Director at the Centre for Finance & Security at RUSI, notes, “There is a chasm in most countries between the capabilities of criminals and law enforcement when it comes to crypto use.” This chasm is widened by a patchwork of national laws, barriers created by international borders, poor information sharing between jurisdictions, and critically limited crypto-tracing and asset recovery capabilities for authorities. This environment makes cryptocurrency a classic low-risk, high-reward tool for criminal financial operations, allowing networks like the CMLNs to flourish with relative impunity.