llicit cryptocurrency transactions accounted for less than 1% of total on-chain transaction volume in 2025, according to a new report from Binance Research, which argues that blockchain transparency is becoming one of the biggest obstacles for criminals attempting to launder digital assets.
The report states that more than $75 billion in illicit crypto funds remain trapped on-chain as of May 2026, despite the rapid growth of the overall cryptocurrency market. Binance Research said enhanced compliance systems, stablecoin freezes, blockchain analytics, and transaction monitoring are making it increasingly difficult for criminals to move or cash out illicit funds.
“Blockchain’s transparency is a launderer’s worst enemy,” Binance Research wrote in a public summary shared on social media.
Binance Research Says Most Crypto Activity Is Legitimate
The report pushes back against the long-standing perception that cryptocurrency is primarily used for illegal activity. Binance Research said illicit transactions still represent only a small fraction of total blockchain activity, even as absolute volumes of suspicious funds have increased alongside broader crypto adoption.
According to the report, stronger Know Your Customer (KYC) and Know Your Transaction (KYT) systems have dramatically narrowed the pathways criminals can use to move funds anonymously. Stablecoin issuers and exchanges have also become increasingly aggressive about freezing suspicious wallets and cooperating with law enforcement.
The research further argues that the public and permanent nature of blockchain ledgers creates long-term traceability that traditional cash-based money laundering systems often lack.
Criminal Funds Often Remain Traceable for Years
One of the report’s key findings involves the limited capacity of crypto “mixers,” services designed to obscure transaction trails by pooling and redistributing digital assets. Binance Research said major mixers can process only around $10 million daily, creating significant bottlenecks for large-scale laundering operations.
As a result, stolen or sanctioned crypto funds frequently remain visible on public blockchains for extended periods, sometimes years, while investigators continue tracing their movements.
The report suggested that laundering even $1 billion through existing mixer infrastructure could theoretically take more than 100 days, giving compliance firms and law enforcement agencies substantial time to track suspicious activity.
More than 80% of illicit on-chain funds have already moved to downstream addresses, according to the report, but blockchain analysis tools still allow investigators to monitor those transfers.
Crypto Crime Volumes Still Reached Record Levels in 2025
Despite the relatively small percentage share, independent blockchain analytics firms reported that total illicit crypto transaction volume reached record highs in 2025.
Blockchain intelligence firm TRM Labs estimated that illicit cryptocurrency activity rose to approximately $158 billion last year, driven largely by sanctions evasion, hacking activity, ransomware, and state-linked financial networks.
However, TRM Labs also found that illicit activity represented only around 1.2% of total on-chain volume in 2025, down slightly from 1.3% the previous year.
Similarly, blockchain analytics firm Chainalysis reported that illicit crypto activity accounted for less than 1% of total crypto transaction volume despite reaching an estimated $154 billion in absolute value.
The reports suggest that while crypto-related crime remains substantial in dollar terms, legitimate blockchain activity is growing significantly faster than illicit use.
Stablecoins Dominate Illicit Crypto Activity
According to Chainalysis data cited in industry reports, stablecoins accounted for roughly 84% of illicit crypto transaction volume in 2025.
Analysts say criminals increasingly prefer stablecoins because of their lower volatility, ease of cross-border transfer, and deep liquidity across global exchanges.
However, stablecoin issuers including Tether and Circle have expanded cooperation with regulators and law enforcement agencies, freezing billions of dollars tied to scams, sanctions violations, hacking groups, and terrorist financing.
Binance Research argued that these enforcement mechanisms are becoming increasingly effective at limiting criminals’ ability to convert blockchain assets into usable fiat currency.
Binance Highlights Growing Compliance Investments
The report also emphasized Binance’s expanding compliance infrastructure following years of scrutiny from regulators worldwide.
Independent data from blockchain analytics firms previously showed Binance significantly reduced direct exposure to illicit flows between 2023 and 2025 after investing heavily in compliance staffing, transaction monitoring, and law enforcement partnerships.
According to industry reports, Binance now employs more than 1,200 compliance and investigations specialists globally and has handled hundreds of thousands of law enforcement requests.
The exchange has also participated in initiatives with firms such as TRM Labs and Tether aimed at identifying and freezing illicit blockchain transactions in real time.
Critics Warn Crypto Crime May Still Be Underestimated
Not everyone agrees with Binance’s conclusions. Some anti-money laundering experts argue that blockchain crime statistics may underestimate the true scale of illicit activity because many suspicious wallets remain unattributed or unidentified.
Critics also note that sophisticated criminal organizations increasingly use cross-chain bridges, decentralized finance protocols, and offshore exchanges to obscure transaction trails.
Recent investigations involving sanctions evasion, ransomware operations, and state-linked financial networks have demonstrated how crypto infrastructure can still facilitate large-scale illicit finance.
Reuters recently reported that Iran-linked crypto flows involving the Nobitex exchange moved billions of dollars through blockchain networks tied to major crypto ecosystems, including Tron and BNB Chain.
Still, compliance firms generally agree that blockchain’s transparent ledger structure gives investigators capabilities unavailable in traditional financial systems, where illicit cash movements can be far harder to trace.
Regulators Increase Focus on Blockchain Surveillance
Governments and regulators worldwide are increasingly adopting blockchain analytics tools as cryptocurrency markets expand into mainstream finance.
Research institutions and technology firms are also developing advanced anti-money laundering systems using artificial intelligence and graph-based transaction analysis to detect suspicious blockchain behavior more effectively.
The rise of tokenized assets, stablecoins, decentralized finance, and cross-chain trading has intensified the need for more sophisticated monitoring systems across multiple blockchain ecosystems.
Industry analysts say the future of crypto regulation may depend heavily on whether blockchain transparency continues to outweigh criminals’ evolving laundering techniques.
Binance Research argues that the growing visibility of blockchain transactions — combined with stronger compliance tools and international enforcement cooperation — may ultimately make cryptocurrency networks less attractive for illicit finance than traditional cash-based systems.
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