The International Consortium of Investigative Journalists (ICIJ), a global network of hundreds of journalists who helped highlight major money laundering operations such as the Panama Papers, has turned its attention to cryptocurrency and found an almost inexhaustible pool of wrongdoing.
ICIJ’s series of investigative reports on crypto, called Coin Laundering, showed how illicit funds are channeled through major exchanges such as Binance, OKX, Coinbase, Kraken, Bybit and Kucoin.
The crypto assets tracked by the ICIJ were linked to criminal enterprises around the world, including North Korean hackers, Chinese and Russian criminal gangs focused on people smuggling, drug trafficking of substances like fentanyl, Mexico’s Sinaloa drug cartel, and brazenly carried out using “crypto-cash storefront” operations in places like Ukraine and Dubai.
The ICIJ said its findings demonstrate “how the rise of blockchain technology – combined with the speed, anonymity and global reach of cryptocurrency transactions – has quietly spawned a shadow financial system that operates faster, darker and further beyond the reach of regulators and law enforcement.”
In practice, this means that a drug cartel, say, can easily use an entirely new financial system involving dollar-pegged stablecoins, for example, to move cash around, whereas in the old days criminals would have to stuff cash into the trunk of the car, according to an analyst ICIJ spoke to.
“For decades we have shown how hidden money moves through offshore havens. Now we are revealing how the same forces are exploiting crypto markets to move illicit cash into view,” ICIJ Executive Director Gerard Ryle said in a statement.
“Our investigation raises pressing questions: How complicit are major crypto exchanges in enabling criminal activity? And why are regulators struggling to keep up with a financial system that thrives on 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 suspect wallet addresses, many of which are contracted to work with the compliance departments of major exchanges. The ICIJ investigations appear to have relied on some smaller, independent blockchain researchers to conduct its analysis.
More than 100 journalists from more than 35 countries collaborated with ICIJ on the project. Media partners include The New York Times, Le Monde, The Toronto Star, Malaysiakini, The Indian Express and the Australian Financial Review.
Coindesk contacted Binance, OKX, Coinbase, Kraken, Bybit and Kucoin for comment.
