At least $28 billion linked to criminal activity has entered major cryptocurrency exchanges over the past two years, despite the industry’s claims of security and increasing mainstream acceptance. The influx of “dirty money” originates from hackers, thieves, extortionists, and organized crime groups operating globally, including state-sponsored actors in North Korea and scam networks spanning continents.
The analysis, conducted by the International Consortium of Investigative Journalists, The New York Times, and 36 other news organizations, reveals that illicit funds are systematically routed through the world’s largest exchanges. These platforms facilitate the conversion of U.S. dollars and other currencies into cryptocurrencies like Bitcoin and Ether.
Key Findings:
- Binance, the world’s largest exchange, was involved in a $2 billion deal with a crypto firm linked to former President Trump, even as illicit funds flowed through its platform.
- At least eight other prominent exchanges, including OKX, have received substantial amounts of criminal proceeds.
- The early adoption of cryptocurrency by criminals was driven by its speed and relative anonymity, making it ideal for money laundering.
- The volume of illicit activity is overwhelming law enforcement capabilities, raising concerns about the sustainability of the current system.
The Scale of the Problem:
The flow of illicit funds is not limited to small-time criminals. North Korean hackers, known for sophisticated cyberattacks, have used cryptocurrency to launder stolen funds. Scam networks operating in Myanmar and other regions funnel money through exchanges, exploiting regulatory gaps and weak enforcement.
Industry Response:
Despite growing scrutiny, many exchanges have been slow to implement effective anti-money laundering (AML) controls. While some platforms claim to cooperate with law enforcement, the sheer volume of transactions makes it difficult to track and intercept illicit funds.
Regulatory Challenges:
The decentralized nature of cryptocurrency poses significant challenges for regulators. Criminals exploit jurisdictional loopholes and privacy-enhancing technologies to evade detection. The lack of consistent global standards further complicates enforcement efforts.
“Law enforcement can’t cope with the overwhelming amount of illicit activity in the space,” says Julia Hardy, co-founder of crypto investigations firm zeroShadow. “It can’t go on like this.”
The continued influx of dirty money into cryptocurrency threatens to undermine the industry’s credibility and hinder its wider adoption. Without stronger regulatory oversight and more effective AML controls, the flow of illicit funds is likely to persist, posing a systemic risk to the global financial system
