Centralized Exchanges Are Still Criminals’ Favorite Crypto Money Laundering Tool

Why It Matters

The piece argues regulators should refocus on tightening and policing exchange KYC and fiat corridors to curb the bulk of crypto money laundering and protect the banking system.

Summary

Despite high‑profile convictions like Tornado Cash co‑founder Roman Storm, criminal proceeds in 2024 flowed primarily through regulated centralized crypto exchanges, which function as the main on‑ and off‑ramps to fiat, Chainalysis data show. Enforcement actions — including Binance’s publicized 2023 settlement and a $213 million boost to its compliance division and BitMEX’s $100 million fine — underscore systemic gaps rather than isolated mixer misuse. Weak or outsourced KYC controls, exploitable identity checks and mule networks let illicit funds be converted into dollars, euros and yen at scale. The piece argues regulators should refocus on tightening and policing exchange KYC and fiat corridors to curb the bulk of crypto money laundering and protect the banking system.