US Reduces Crypto Money Laundering Oversight Staff
The United States has sharply reduced the number of staff assigned to oversee anti-money laundering (AML) safeguards at cryptocurrency exchanges. This development comes as a recent Chainalysis report revealed a significant surge in illicit financial flows tied to digital assets.
- The specific IRS office responsible for anti-money laundering (AML) safeguards at crypto exchanges and other money service businesses saw its staff of investigators fall by 33% in 2025, dropping from 208 to 139 agents. - This reduction is part of a broader 25% decrease in the total IRS workforce since the beginning of the current administration, with the Small Business/Self-Employed division, which handles audits for many crypto traders and exchanges, being the hardest hit with a 35% staff reduction. - The Treasury Department's 2023 Illicit Finance Risk Assessment for Decentralized Finance noted that many DeFi services lack AML controls, making them vulnerable to exploitation by illicit actors for instantaneous and pseudonymous transactions. - A recent lawsuit alleges that the Solana-based memecoin launchpad, Pump.fun, facilitated a "fraudulent online gambling and money transmission scheme," with Solana Labs and Jito Labs named as co-defendants for allegedly providing the infrastructure. - The North Korea-linked Lazarus Group allegedly used Solana's Pump.fun platform to launder millions of dollars from the $1.5 billion Bybit hack by creating new meme coins, mixing stolen funds with legitimate trading activity to obscure the money trail. - Attackers on Solana are utilizing various exfiltration routes, including swapping funds across multiple DEXs, using cross-chain bridges like Wormhole and Mayan Finance to fragment the transaction trail, and leveraging accounts with spoofed KYC on centralized exchanges to off-ramp into fiat. - Illicit actors are able to launder approximately $500,000 to $1,000,000 daily through Solana DEXs, depending on liquidity, and can also use specialized Solana mixer programs that pool and distribute funds to fresh wallets to increase anonymity. - Crypto hackers are accelerating their laundering processes, with one report finding 76% of stolen funds are moved before a public disclosure of the hack is even made, sometimes in as little as two seconds.
