Money laundering remains one of the most pressing challenges in cybersecurity and financial crime. At its core, laundering is about disguising illicit proceeds so they appear to originate from legitimate sources. In the digital era, however, the rise of cryptocurrencies, dark web marketplaces, decentralized finance (DeFi), and NFTs has fundamentally reshaped how laundering is carried out.

This article explores the traditional stages of money laundering and how they have evolved in online and blockchain-based environments, including the use of NFTs, mixers, and privacy tools.

The Traditional Stages of Money Laundering

Money laundering is commonly described as a three-stage process:

1. Placement

Placement involves introducing “dirty” money into the financial system. Traditionally, this meant depositing large amounts of cash into banks, purchasing assets, or using cash-intensive businesses to disguise the origin of funds.

2. Layering

Layering is the process of obscuring the source of funds through complex financial transactions. This may include transferring money between multiple accounts, shell companies, wire transfers, or converting funds into different assets. The goal is to make tracing the origin of the money as difficult as possible.

3. Integration

Integration occurs when laundered funds are reintroduced into the economy as seemingly legitimate income. This can take the form of business revenue, real estate investments, luxury goods, or asset sales. While these stages remain conceptually the sam

While these stages remain conceptually the same, digital technologies have transformed how each step is executed.

Evolution in the Digital Age and the Dark Web

The emergence of cryptocurrencies and dark web marketplaces has introduced new dynamics into money laundering. Dark web markets—accessible through anonymity networks like Tor—facilitate global trade in illicit goods such as drugs, stolen data, hacking tools, and malware. Payments on these platforms are almost exclusively made using cryptocurrency.

As a result, many criminals now receive proceeds of crime directly in digital form rather than cash. For example, ransomware groups, fraudsters, and darknet vendors are paid in Bitcoin or other cryptocurrencies. This effectively shifts the placement stage into the digital realm, bypassing traditional cash-handling risks altogether.

The challenge then becomes how to obscure and eventually cash out these digital funds without revealing identities. To address this, criminals rely on a growing ecosystem of online tools and services.

One major development is the use of conversion services during the layering stage. According to blockchain analytics firms such as Chainalysis, illicit crypto is often routed through coin swaps, DeFi protocols, gambling platforms, mixers, and cross-chain bridges. Each transaction adds complexity and distance between the funds and their criminal origin.

Ironically, while criminals exploit digital systems, blockchain technology also gives investigators new advantages. Public blockchains permanently record transactions, allowing law enforcement and analytics companies to trace illicit flows in ways that are impossible with cash. As noted in recent Chainalysis reports, this transparency has become one of the most powerful tools in modern financial investigations.

NFTs as a New Laundering Vehicle

Non-fungible tokens (NFTs) have emerged as another experimental laundering channel. NFTs are unique blockchain-based tokens, often associated with digital art or collectibles. Their use in laundering mirrors long-standing practices in the traditional art world, where high-value artwork can be purchased with illicit funds and later resold to create the appearance of legitimate income.

Although NFT-based laundering remains relatively limited in scale, it is measurable. Blockchain analysis shows that funds sent to NFT marketplaces from illicit addresses surged in late 2021, reaching approximately $1.4 million in the fourth quarter alone.

Criminal tactics include wash trading—buying and selling NFTs between wallets they control—or purchasing high-value NFTs using tainted cryptocurrency to blur the trail of ownership and value. While the overall impact is smaller compared to mixers or exchanges, NFTs demonstrate how criminals adapt quickly to emerging technologies.

Mixers, Tumblers, and Privacy Tools

To further complicate blockchain tracing, illicit actors frequently rely on cryptocurrency mixers, also known as tumblers. These services pool funds from multiple users and redistribute them to new addresses, severing the visible link between sender and receiver.

Mixers play a critical role in the layering stage of crypto laundering. They have been widely used to launder proceeds from hacks, ransomware, darknet sales, and fraud. After major thefts or ransomware payments, funds are often sent through one or more mixers before moving onward. Once funds pass through a mixer, tracing them becomes significantly more difficult.

Well-known examples include Bitcoin tumbling services and Ethereum-based tools such as Tornado Cash. Tornado Cash, in particular, became notorious for its use by cybercriminal groups, including North Korea’s Lazarus Group. The service allowed users to deposit tokens and later withdraw them to fresh addresses with no direct on-chain link.

In response, authorities have increasingly taken action. In August 2022, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Tornado Cash. In 2023, the U.S. Department of Justice indicted two alleged founders of the service, accusing them of facilitating more than $1 billion in money laundering transactions, including hundreds of millions linked to state-sponsored cybercrime.

Conclusion

Money laundering has always been a game of adaptation—criminals continuously exploit weaknesses in financial systems while authorities work to close them. Cryptocurrencies and the dark web have created new opportunities for laundering, where borders are irrelevant and pseudonymity is built in.

Yet the fundamentals remain the same. Placement, layering, and integration still exist, but now they often begin with cryptocurrency instead of cash, move through mixers, DeFi protocols, or NFTs, and conclude with cash-outs through exchanges or asset sales.

While privacy-focused coins and decentralized tools offer stronger concealment, they also face growing scrutiny and enforcement. At the same time, blockchain transparency has given investigators unprecedented visibility into illicit financial flows.

As technologies evolve, so too will laundering techniques—but so will the tools used to detect and disrupt them.