Core Insights - Russian darknet markets (DNMs) processed approximately $1.9 billion in Bitcoin from January to September 2025, highlighting the significant role of regulated crypto exchanges in laundering illicit funds [2][3][4] - The report by Global Ledger indicates that these funds were funneled through at least 20 centralized exchanges, which hold over 130 international licenses, demonstrating a complex network exploiting compliance weaknesses [3][4][5] Summary by Sections Darknet Market Activity - DNMs moved nearly $2 billion worth of Bitcoin in the first nine months of 2025, with Kraken facilitating the largest volume of illicit transfers at $1.3 billion [1][2] - Other notable exchanges included BlackSprut at $344 million and Omg!Omg! at $123.4 million [1] Compliance and Regulatory Issues - The analysis revealed that exchanges were exploited for deposits and withdrawals through third parties, often without their knowledge, leading to a total exchange exposure of $291 million [4][5] - Compliance processes are hindered by the sophisticated tactics employed by darknet actors, who bypass anti-money laundering checks through over-the-counter (OTC) and peer-to-peer (P2P) intermediaries [4][5][6] Transaction Methods and Trends - Darknet actors utilize multiple obfuscation layers, including "peel-chains" and long multi-hop paths, to mask the source of funds before they reach centralized exchanges [5][6] - Following sanctions against Russian exchange Garantex, there was a notable shift in darknet payment behavior, with major Russian-language marketplaces moving away from direct USDT deposits [9][10] Industry Response and Future Outlook - Global Ledger is preparing targeted disclosures for affected exchanges and regulators to enhance compliance and understanding of exposure to illicit activities [7][8] - Experts emphasize that the real challenge lies in internal compliance policies rather than technological limitations, as transaction monitoring systems are already advanced [8][9]

Core Insights - Roman Storm, co-founder of Tornado Cash, was convicted for operating an unlicensed money-transmitting business, marking a significant moment in the fight against crypto money laundering [1] - Regulators have historically viewed mixers like Tornado Cash as major money laundering threats, but data suggests that centralized exchanges are the primary facilitators of crypto money laundering [2][3] Centralized Exchanges as Laundering Hubs - Centralized exchanges are identified as the main platforms for laundering illicit crypto funds, with a 2025 Chainalysis report indicating that most illicit funds were routed through these exchanges in 2024 [5] - Criminals prefer centralized exchanges due to their liquidity, speed, and global reach, which allow for the conversion of dirty crypto into cash [6] - Compliance programs at centralized exchanges are often under-resourced and poorly enforced, leading to illicit transactions being overlooked [6] Enforcement and Compliance Issues - High-profile cases, such as the U.S. Justice Department's settlement with Binance, have highlighted systemic issues within centralized exchanges, including their involvement in transactions related to ransomware and darknet markets [7] - Binance has increased its compliance spending to $213 million in 2023 following these revelations [7] - BitMEX faced a $100 million fine for violations of the Bank Secrecy Act, with its founders later receiving pardons [7]