While the global regulatory landscape around cryptocurrencies continues to evolve, crypto’s role in money laundering remains persistent and sophisticated. A recent analysis of the Bybit hack illustrates how crypto mixers and cross-chain bridges are increasingly being used to conceal illicit funds, despite technological advances in blockchain tracing. Bybit CEO Ben Zhou revealed that 88% of the stolen assets in the February 2025 hack are still traceable, but over 7.5% have “gone dark” — a troubling sign that obfuscation tools are still effective. Zhou pointed to Tornado Cash, Wasabi, Railgun, and Crypto Mixer as the primary platforms used for laundering the stolen assets, most of which were eventually funneled through peer-to-peer channels.

The Bybit Hack: A Case Study in Modern Crypto Laundering

Anatomy of a High-Stakes Operation

Zhou urged the community to help decode mixer transactions, calling it the “number one challenge” in recovering stolen funds. Blockchain forensics firm Elliptic linked the Bybit hack to the Lazarus Group, a notorious North Korean hacking syndicate that may have used the theft to fund Pyongyang’s nuclear program.

Arkham Analytics tracked 12.9 BTC from the stolen funds to an unknown address on March 20, further emphasizing the complexity of tracing stolen crypto after it’s been laundered through multiple layers.

Laundering Trends: Peaks, Drops, and Professionalization

From Pandemic Boom to Institutional Challenge

Crypto-based money laundering surged in 2022, reaching $31.5 billion — nearly double 2021’s $18.3 billion and triple the 2019 average. Though this figure declined to $22.2 billion in 2023, it still dwarfs pre-2021 levels. Chainalysis data shows that even with a 15% drop in total crypto volume, laundering operations remain stubbornly high.

The criminal use of crypto has remained steady at around $50 billion annually since 2022, indicating a plateau rather than a decline. Experts suggest the ecosystem has become more diverse and professional, with hackers deploying a blend of mixers, decentralized exchanges, and off-ramp services.

The Toolmaker Debate: Innovation or Enabler?

Crypto’s Civil Liberties Battle Over Privacy Tools

While prosecutors aim to hold developers of privacy tools accountable, the crypto community continues to argue that building open-source, privacy-focused tools is not inherently criminal. Prominent cases like Tornado Cash’s Roman Storm and Samourai Wallet’s founders have sparked intense debates about technological neutrality and legal overreach.

Crypto lawyer Marta Belcher drew a powerful analogy: “We don’t blame Ford when a car is used in a bank robbery.” Still, in 2025, courts are leaning toward penalizing developers, with Samourai Wallet’s founders facing up to 25 years in prison.

Key Stats: Crypto Crime and Laundering

How Much Illicit Money Moves Through Crypto?

• 2022 laundering volume: $31.5B
• 2023 laundering volume: $22.2B
• 2023 total criminal crypto use: ~$50B
• Major tools: Tornado Cash, Wasabi, Railgun, Crypto Mixer
• 5 off-ramp services enabled 1/3 of laundering between 2019-2023

Mixer Use Declines, But Bridges Rise

Evasion Tactics Evolve With Regulation

• Mixer use peaked in 2022, then declined due to law enforcement action
• Cross-chain bridge usage has increased, making tracing harder
• P2P transactions play a larger role in laundering flows
• Developers now face legal action for enabling these tools