Darknet vendors turn to DeFi amid evolving crypto laundering tactics

Darknet vendors are increasingly turning to decentralised finance (DeFi) protocols for laundering illicit funds, according to Chainalysis’ 2025 Crypto Crime Report.

This shift comes as stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations on centralised exchanges (CEXs) make traditional laundering methods more difficult.

The report notes that while CEXs remain the primary method for cashing out illicit crypto, DeFi platforms are playing a growing role in storing, transferring, and obfuscating these funds.

Vendors on darknet markets (DNMs) have adopted DeFi due to its lack of centralised oversight, allowing them to bypass regulatory scrutiny.

Chainalysis observed that “DNM vendors sent a significantly higher portion of their funds to DeFi than they did historically.”

Wholesale vendors, who operate on a larger scale, are leading this trend by using DeFi platforms extensively.

Smaller retail vendors, meanwhile, are opting to hold their earnings in personal wallets to delay detection.

The report also highlights that scams across multiple blockchains, including Ethereum (CRYPTO:ETH), Tron (CRYPTO:TRX), and Solana (CRYPTO:SOL), have further increased the use of DeFi protocols for laundering activities.

In addition to platform shifts, there has been a notable change in the cryptocurrencies used by darknet operators.

Bitcoin (CRYPTO:BTC), once the dominant currency for illicit transactions, is being replaced by Monero (CRYPTO:XMR) due to its advanced privacy features.

Unlike Bitcoin’s transparent public ledger, Monero employs ring signatures and stealth addresses, making it nearly impossible to trace transactions.

Chainalysis noted that “many operators have since moved to accepting only Monero,” as law enforcement agencies improve their ability to track Bitcoin transactions.

Despite these developments, darknet market revenues declined in 2024, falling from $2.3 billion in 2023 to $2 billion.

This drop reflects increased law enforcement efforts and disruptions of major darknet operations.

The rise of DeFi adoption among illicit actors underscores the evolving challenges faced by regulators and enforcement agencies.

As laundering tactics grow more sophisticated, authorities must adapt their tracking methods to address the decentralised nature of these platforms effectively.