Decentralized finance (DeFi): Development Prospects and Risks of Use in Illegal Activities

Introduction: the paper examines the phenomenon of decentralized finance (DeFi) as one of the most promising and at the same time controversial areas of the digital economy. DeFi is defined as an ecosystem of protocols and applications based on blockchain and smart contracts that allows financial transactions to be carried out without the intermediation of traditional institutions. It is noted that the key advantages of the technology are transparency, automation, reduction of transaction costs, and expansion of the accessibility of financial services. Simultaneously, risks associated with the lack of unified regulatory approaches, high vulnerability of smart contracts, the use of DeFi for unlawful purposes, and the uncertainty of legal liability are emphasized. Particular attention is paid to AML/KYC problems, as well as the use of DeFi platforms for money laundering of criminal proceeds.