The illicit on-chain money laundering ecosystem reached over $82 billion in 2025, due to the growing accessibility and liquidity of digital assets. This was accompanied by, or possibly due to, a shift in how laundering activity occurs and by whom, with Chinese-language money laundering networks (CMLNs) now dominating, according to a new report from blockchain analysis firm Chainalysis.
The report, published Tuesday, outlined how CMLNs, which emerged during the pandemic, processed almost $40 million worth of digital assets daily in 2025 and an estimated 20% of all illicit crypto funds over the past five years.
In one specific example, highlighted in the scams chapter of the report, Chainalysis showed how CLMNs have grown to now consistently launder over 10% of funds stolen in pig butchering scams—the increasingly prevalent scam in which the criminal builds relationships with unsuspecting users before stealing their funds.
“While CMLNs are by no means the only facilitator of on-chain laundering, Chinese-language Telegram-based services now account for a disproportionate share of the attributed global on-chain money laundering landscape,” the report read.
The Chainalysis research, based on connecting real-world activity to blockchain records using machine learning and forensic experts, found that CMLNs processed $16.1 billion in 2025, approximately $44 million per day across more than 1,799 active wallets.
The rate of growth was also concerning, as inflows to identified CMLNs grew 7,325 times faster than those to centralized exchanges, 1,810 times faster than those to decentralized finance (DeFi), and 2,190 times faster than intra-illicit on-chain flows.
Further, the report noted that the rise of CMLNs as the main route for laundering of illicit funds coincided with a steady decline in the use of centralized exchanges, “potentially because exchanges can freeze funds.”
“Chinese-language guarantee platforms, money movement services, and associated financial crime networks reveal a complex and resilient ecosystem that continues to adapt despite enforcement efforts,” Chainalysis said. “The scale and integration of these operations present significant challenges for financial crime compliance, intelligence, and law enforcement efforts.”
As to why these networks have developed quite so rapidly, one theory posited in the report was that they are an unforeseen consequence of the imposition of capital controls in China.
Since the 1970s, Chinese authorities have variously imposed some form of controls on capital accounts, restricting citizens from engaging in cross-border capital markets for investment and financing. However, China experienced large-scale capital flight& in 2015 and 2016, as households moved savings abroad to protect against slowing growth and devaluation. As a result, China tightened its capital controls to stop rapid money outflows. Authorities restricted overseas investment, tightened currency conversion, and monitored transfers more closely to stabilize reserves, the exchange rate, and financial confidence.
Chainalysis quoted Tom Keatinge, Director at the Centre for Finance and Security at the Royal United Services Institute, who explained that these restrictions may have led to the growth of the CMLNs that are now being so successfully abused by money launderers.
“Wealthy individuals seeking to move money out of China and evade these controls provide the impetus and liquidity pool needed to service organized crime groups based in the West,” explained Keatinge. “The professional enablers of this capital flight provide the services necessary to match these two independent yet mutually beneficial needs.”
All of which begs the question, what is to be done about these growing money laundering networks? In this regard, Chainalysis also proffered some advice on how authorities could best respond to this growing and difficult to track ecosystem.
How to combat the threat
According to the report, effective disruption of these CMLNs requires targeting the illicit operators and vendors themselves, in addition to their advertising venues.
“Addressing the challenge of crypto-integrated laundering networks demands coordinated public-private partnership and a paradigm shift from reactive enforcement against individual platforms toward proactive disruption of underlying networks,” said Chainalysis.
This view was supported in the report by Keatinge, who argued there is a “chasm” in most countries between the capabilities of criminals and law enforcement, when it comes to digital asset use, that must be addressed.
“Whilst blockchain tracing companies have provided welcome assistance in some cases, this capacity building is just the tip of the iceberg,” he said. “A systemic global effort to upskill the crypto capabilities of law enforcement around the world and create better information sharing mechanisms is urgently needed.”
The report concluded on a hopeful note, suggesting that through a combination of law enforcement’s legal authorities, the private sector’s technical capabilities and blockchain analytics expertise, the industry and authorities alike can “more effectively identify and dismantle these services operating across multiple platforms, jurisdictions, and communication channels.”
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Source: https://coingeek.com/chinese-language-networks-dominate-82b-illicit-fund-laundering/
