The number of criminals using so-called privacy wallets to facilitate crypto money laundering is on the rise, according to Elliptic, a U.K.-based blockchain analytics company.

The firm estimates that over 13% of the proceeds from crime involving bitcoin are now being transferred through such wallets – a 2% increase from 2019, according to a report published Wednesday.

Elliptic said privacy wallets, like Wasabi Wallet, have tools that help obfuscate the identity of users. An example is the automatic peer matching and sending of CoinJoin transactions, in which bitcoin is mixed within one transaction.

The wallets are proving popular as a means to avoid the risks of centralized coin-mixing services, such as theft of funds by service providers and authorities running “honeypot” sites, per the report.

In 2020, Elliptic estimates $160 million in bitcoin from the darknet, thefts and scams has been laundered through privacy wallets.

The hack of prominent Twitter accounts in the summer promoted a crypto scam that raised $120,000 in cryptocurrency, much of which was laundered through Wasabi Wallet, the report indicated. The same thing is said to have happened following the September KuCoin exchange hack that saw $280 million in crypto stolen.

Elliptic acknowledged that there are legitimate uses for privacy wallets, but said criminals have been quick to latch into the new services.

The trend poses a “growing challenge for regulators, law enforcement and compliance professionals seeking to combat financial crime in cryptoassets,” the firm said.

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