Illicit Crypto Funds Top $75 Billion, But Cashing Out Gets Harder

The total volume of illicit funds moving through blockchain networks has surpassed $75 billion, according to new research from Binance Research. The figure, shared via the firm’s official X account, represents a 28% increase from 2024 levels and marks the highest annual total since tracking began in 2016.

Why illicit volume is rising — and why it still matters

Despite the headline figure, the research emphasizes that illicit transactions account for less than 1% of total on-chain transaction volume. The vast majority of blockchain activity remains legitimate. However, the absolute growth in illicit funds signals persistent challenges in the ecosystem, particularly around theft, ransomware, and fraud.

Binance Research noted that the increase is partly driven by larger individual heists and more sophisticated laundering attempts, rather than a broad expansion of criminal activity. The data underscores the need for continued vigilance, even as the relative share of illicit flows remains small.

How the system blocks cash-outs

The research details multiple layers of defense that make it increasingly difficult for bad actors to convert illicit crypto into fiat currency or other assets.

• KYT (Know Your Transaction): Suspicious wallets are flagged during transaction monitoring, often before funds can be moved to exchanges.
• KYC (Know Your Customer): Withdrawal paths are blocked at the exchange level when flagged wallets attempt to cash out.
• Stablecoin freezes: Issuers like Tether and Circle can freeze funds linked to sanctioned or suspicious addresses.
• Law enforcement seizures: Agencies increasingly conduct direct seizures from wallets and exchanges, recovering stolen assets.

These measures create a structural barrier that makes illicit funds ‘sticky’ — hard to move, hard to convert, and hard to spend.

The laundering bottleneck

Binance Research also highlighted a critical bottleneck for criminals: even the largest cryptocurrency mixers, which are tools designed to anonymize transaction histories, have limited capacity. The biggest mixers can process roughly $10 million per day. At that rate, laundering $1 billion would take more than 100 days.

While over 80% of illicit funds have been moved from their original wallet addresses, every transaction path remains permanently recorded on the blockchain. This means tracking is never truly broken — only delayed.

What this means for the broader crypto ecosystem

The findings reinforce a growing narrative among regulators and industry participants: blockchain transparency is a feature, not a bug. While illicit actors can move funds, they cannot erase the trail. Combined with stricter compliance measures at exchanges and stablecoin issuers, the cost of laundering continues to rise.

For legitimate users, the data suggests that the ecosystem’s anti-fraud infrastructure is maturing. The structural barriers to cashing out illicit funds are not easily bypassed, and law enforcement coordination has improved significantly in recent years.

Conclusion

The $75 billion figure is a reminder that crypto crime remains a real, if relatively small, part of the market. But the systems in place — from KYT screening to stablecoin freezes to mixer capacity limits — are making it progressively harder for bad actors to profit. For the industry, the message is clear: the technology that makes blockchain transparent also makes it hostile to illicit finance.

FAQs

Q1: How does KYT differ from KYC?
KYT (Know Your Transaction) monitors blockchain transactions in real time to flag suspicious activity, while KYC (Know Your Customer) verifies the identity of users at the exchange level. Both are used together to block illicit funds.

Q2: Can stablecoin issuers really freeze funds?
Yes. Tether and Circle, the two largest stablecoin issuers, have the ability to freeze addresses that are linked to sanctioned entities, hacks, or other illicit activity. This has been done multiple times in coordination with law enforcement.

Q3: Why can’t criminals just use privacy coins?
Privacy coins like Monero offer stronger anonymity, but they face limited exchange support and lower liquidity. Most illicit actors still need to convert funds into fiat or widely accepted assets, which creates exposure points where compliance measures apply.