The International Consortium of Investigative Journalists (ICIJ), a global network of hundreds of reporters who have helped uncover major money laundering operations such as the Panama Papers, has turned its attention to cryptocurrencies and discovered that they are an almost inexhaustible trove of fraud.
ICIJ’s series of investigative reports on cryptocurrencies, dubbed “Coin Laundry,” revealed how illicit funds are amassed through major exchanges such as Binance, OKX, Coinbase, Kraken, ByBit, and KuCoin.
The crypto funds tracked by ICIJ have ties to criminal enterprises around the world, including North Korean hackers, Chinese and Russian criminal organizations focused on human trafficking, drug trafficking such as fentanyl, and Mexico’s Sinaloa drug cartel, and are brazenly run using “crypto over-the-counter” operations in places like Ukraine and Dubai.
ICIJ said the findings “show that the rise of blockchain technology, combined with the speed, anonymity, and global reach of virtual currency transactions, has quietly created a shadow financial system that operates faster, darker, and beyond the reach of regulators and law enforcement.”
In practice, this means that drug cartels can easily take advantage of a whole new financial system, including stablecoins pegged to the dollar, to move cash, for example, whereas in the past, criminals would have had to stuff cash into the trunk of their car, according to one analyst interviewed by ICIJ.
“For decades, we have exposed how hidden funds move through offshore havens, and now we are revealing how the same forces are exploiting cryptocurrency markets to move illicit funds in plain sight,” ICIJ Director General Gerard Lyle said in a statement.
“Our investigation raises urgent questions: How are major crypto exchanges complicit in enabling criminal activity? And why are regulators struggling to keep pace with a thriving financial system that values opacity and speed?” he asked.
The world of cryptocurrency trading is being scrutinized by several large so-called blockchain analytics companies that track illicit funds and suspicious wallet addresses, many of which contract with the compliance departments of major exchanges. ICIJ’s investigation appears to rely on several small, independent blockchain sleuths to perform the analysis.
More than 100 journalists from more than 35 countries partnered with ICIJ on this project. Media partners include The New York Times, Le Monde, Toronto Star, Malaysiakini, Indian Express and Australian Financial Review.
Coindesk has reached out to Binance, OKX, Coinbase, Kraken, Bybit, and Kucoin for comment.
Discover more from Earlybirds Invest
Subscribe to get the latest posts sent to your email.
