Singapore hits banks with $21.5M in fines over a $2.2 billion money laundering scandal involving cash, property and crypto
ZachXBT estimates that between $30 million and $40 million has been swapped to crypto through OTC desks and exchanges.
Mass adoption of stablecoins will amplify illicit finance risks, particularly when it is handled unevenly across difference jurisdictions, the FATF said
North Korea’s hackers has reportedly stolen nearly $2 billion from centralized crypto exchanges over the past year. Blockchain security researcher Tay Monahan attributes a significant portion of those funds, around $1.8 billion, to a series of major hacks targeting centralized crypto trading platforms like Bybit, DMM Bitcoin, WazirX, Phemex, and BingX. Despite setbacks such as […]
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The payments and blockchain firm has agreed to an outside monitor as it resolves its compliance with New York regulations.
The company was expected to assess the nature of risks prevalent in the services it was offering, the Financial Intelligence Analysis Unit said in a notice.
What is crypto money laundering? Crypto money laundering involves concealing illegally obtained funds by funneling them through cryptocurrency transactions to obscure their origin. Criminals may operate offchain but move funds onchain to facilitate laundering.Traditionally, illicit money was moved using couriers or informal networks like Hawala. However, with the rise of digital assets, bad actors now exploit blockchain technology to transfer large amounts of money. With evolving techniques and increasing regulation, authorities continue working to track and mitigate the misuse of cryptocurrencies for money laundering.Thanks to sophisticated technologies like cryptocurrencies, criminals find moving large amounts of money simpler. As cryptocurrency adoption has grown, so has illicit activity within the space. In 2023, crypto wallets linked to unlawful activities transferred $22.2 billion, while in 2022, this figure stood at $31.5 billion. Stages of crypto money laundering Crypto money laundering follows a structured process designed to hide the source of illicit funds. Criminals use sophisticated methods to bypass regulatory oversight and Anti-Money Laundering (AML) measures. The process unfolds in several stages: Step 1 — Gathering funds: The first step involves gathering funds obtained illegally, often from organized crime or fraudulent activities. These illicit earnings need to be moved discreetly to avoid detection by regulatory authorities. Step 2 — Moving funds into the crypto ecosystem: Criminals now move illicit funds into the financial system by purchasing cryptocurrencies. The modus operandi is to buy cryptocurrencies through multiple transactions across crypto exchanges, particularly those with weak AML compliance. To make tracking more complex, they may convert funds into different digital assets like Ether (ETH), Polkadot (DOT) or Tether’s USDt (USDT). Step 3 — Juggling of funds: At this stage, the criminals hide the funds’ ownership. For this purpose, they move their crypto assets through a series of transactions across different platforms, exchanging one cryptocurrency for another. Often, funds are transferred between offshore and onshore accounts to further complicate tracing. Step 4 — Reintroducing cleaned money into the system: The final step involves reintroducing the cleaned money into the economy, which they do through a network of brokers and dealers. They now invest the money in businesses, real estate or luxury assets without raising suspicion.Did you know? Taiwan’s Financial Supervisory Commission has mandated that all local virtual asset service providers (VASPs) must adhere to new AML regulations by 2025. Various methods criminals use to launder cryptocurrencies Criminals employ several methods to launder illicitly obtained digital assets. From non-compliant exchanges to online gambling platforms, they use various techniques to conceal the transaction trail. Below is some brief information about the methods criminals use.Non-compliant centralized exchangesCriminals use non-compliant centralized exchanges or peer-to-peer (P2P) platforms to convert cryptocurrency to cash. Before being converted into fiat, the cryptocurrency is processed through intermediary services like mixers, bridges or decentralized finance (DeFi) protocols to obscure its origins. Despite compliance measures, centralized exchanges (CEXs) handled almost half of these funds. In 2022, nearly $23.8 billion in illicit cryptocurrency was exchanged, a 68% surge from 2021. Decentralized exchanges (DEXs)DEXs operate on a decentralized, peer-to-peer basis, meaning transactions occur directly between users using smart contracts rather than through a CEX. These exchanges are currently largely unregulated, which criminals use for swapping cryptocurrencies and making investigations harder.The absence of traditional Know Your Customer (KYC) and AML procedures on many DEXs allows for anonymous transactions.Mixing servicesCryptocurrency mixers, also called tumblers, enhance anonymity by pooling digital assets from numerous sources and redistributing them to new addresses randomly. They obscure the funds’ origins before they are sent to legitimate channels. A well-known example of criminals using crypto mixers is Tornado Cash, which was used to launder over $7 billion from 2019 until 2022. The developer of the mixer was arrested by Dutch authorities.Bridge protocolsCrosschain bridges, designed to transfer assets between blockchains, are exploited for money laundering. Criminals use these bridges to obscure the origin of illicit funds by moving them across multiple blockchains, making it harder for authorities to track transactions. By converting assets from transparent networks to privacy-enhanced blockchains, criminals evade scrutiny and reduce the risk of detection. The lack of uniform regulatory oversight across different chains facilitates illicit activity.Online gambling platformsCryptocurrency money launderers frequently exploit gambling platforms. They deposit funds from both traceable and anonymous sources, then either withdraw them directly or use collusive betting to obscure the funds’ origin. This process effectively “legitimizes” the money. The Financial Action Task Force (FATF), in its September 2020 report, identified gambling services as a money laundering risk, specifically highlighting suspicious fund flows to and from these platforms, especially when linked to known illicit sources.Nested servicesNested services encompass a wide range of services that function within one or more exchanges, using addresses provided by those exchanges. Some platforms have lenient compliance standards for nested services, creating opportunities for bad actors. On the blockchain ledger, transactions involving nested services appear as if they were conducted by the exchanges themselves rather than by the nested services or individual users behind them. Over-the-counter (OTC) brokers: A commonly used nested service for money laundering OTC brokers are the most prevalent nested service criminals use for crypto money laundering because they allow them to conduct large cryptocurrency transactions securely and efficiently with a degree of anonymity.Transactions may involve different cryptocurrencies, such as Bitcoin (BTC) and ETH, or facilitate conversions between crypto and fiat currencies, like BTC and euros. While OTC brokers match buyers and sellers in exchange for a commission, they do not participate in the negotiation process. Once the terms are set, the broker oversees the transfer of assets between parties.To combat North Korean cybercrime, the US government has taken strong action against the Lazarus Group’s money laundering activities. In August 2020, the US Department of Justice (DOJ) sought to seize 280 cryptocurrency addresses tied to $28.7 million in stolen funds following an investigation into a $250-million exchange heist.Further, in April 2023, the Office of Foreign Assets Control (OFAC) sanctioned three individuals, including two OTC traders, for aiding Lazarus Group in laundering illicit funds, highlighting the group’s continued reliance on OTC brokers.Did you know? Microsoft Threat Intelligence identifies Sapphire Sleet, a North Korean hacking group, as a key actor in crypto theft and corporate espionage. The evolving landscape of crypto money laundering, explained The complex landscape of crypto money laundering involves a dual infrastructure. While CEXs remain primary conduits for illicit funds, shifts are evident. Crosschain bridges and gambling platforms are witnessing increased usage, reflecting evolving criminal tactics. Analysis of deposit address concentrations and crime-specific patterns highlights vulnerabilities. Crypto money laundering infrastructureBroadly, crypto money laundering infrastructure can be categorized into intermediary services and wallets. Intermediary services include mixers, bridge protocols, decentralized finance (DeFi) protocols and other such services. On the other hand, fiat off-ramping services include any service that can help one convert crypto into fiat currency. While centralized exchanges are more commonly used for this purpose, criminals may also use P2P exchanges, gambling services and crypto ATMs. Crypto criminals use intermediary services to hide the origin of funds by concealing the onchain link between the source address and the current address.Key channels used for crypto money launderingDifferent financial services vary in their ability to combat money laundering. Centralized exchanges, for example, possess more control over transactions and have the authority to freeze assets linked to illicit or suspicious sources. However, DeFi protocols operate autonomously and do not hold user funds, making such interventions impractical. The transparency of blockchain technology enables analysts to track funds passing through DeFi platforms, which is often more difficult with centralized services. Centralized exchanges continue to be the primary destination for assets originating from illicit sources, with a relatively stable trend between 2019 and 2023. There was a significant uptick in ransomware proceeds being funneled to gambling platforms and an increase in ransomware wallets sending funds to bridges.Tracking illicit funds through deposit addressesDeposit addresses, which function similarly to bank accounts on centralized platforms, reveal how financial flows are concentrated. In 2023, a total of 109 exchange deposit addresses each received over $10 million in illicit crypto, collectively accounting for $3.4 billion. Comparatively, in 2022, only 40 addresses surpassed the $10 million mark, accumulating a combined total of just under $2 billion.The concentration of money laundering activity also varies by crime type. For instance, ransomware operators and vendors of illegal content exhibit a high degree of centralization. Seven key deposit addresses accounted for 51% of all funds from exchanges from illegal content vendors, while nine addresses handled 50.3% of ransomware proceeds. Criminals’ shift to crosschain and mixing servicesSophisticated criminals are increasingly turning to crosschain bridges and mixing services to obfuscate their financial transactions. Illicit crypto transfers through bridge protocols surged to $743.8 million in 2023, more than doubling from the $312.2 million recorded in 2022. There has been a sharp rise in funds transferred to crosschain bridges from addresses linked to stolen assets. Cybercriminal organizations with advanced laundering techniques, such as North Korean hacking groups like Lazarus Group, leverage a diverse range of crypto services. Over time, they have adapted their strategies in response to enforcement actions. The shutdown of the Sinbad mixer in late 2023, for example, led these groups to shift toward other mixing services like YoMix, which operates on the darknet. National and international frameworks for crypto AML Governments worldwide have implemented laws and guidelines to prevent crypto money laundering. Various national jurisdictions have put in place regulatory frameworks to ensure compliance.United StatesThe Financial Crimes Enforcement Network (FinCEN) regulates crypto asset service providers to prevent money laundering in the US. Crypto exchanges function under the Bank Secrecy Act, which requires the exchanges to register with FinCEN and implement AML and Counter-Terrorist Financing programs. They have to maintain proper records and submit reports to authorities.CanadaCanada was the first country to introduce crypto-specific legislation against money laundering through Bill C-31 in 2014. Transactions involving virtual assets fall under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and related regulations, requiring compliance from entities dealing in digital currencies.European UnionThe Markets in Crypto-Assets (MiCA) Regulation aims to safeguard consumers from crypto-related financial risks. The EU-wide Anti-Money Laundering Authority (AMLA) has also been set up. Crypto Asset Service Providers (CASPs) must collect and share transaction data to ensure traceability, which aligns with global standards. SingaporeSingapore enforces strict AML regulations through the Payment Services Act, which governs digital payment token services. Companies must conduct customer due diligence and comply with AML and Countering the Financing of Terrorism (CFT) measures to operate legally.JapanJapan regulates cryptocurrency under the Act on Punishment of Organized Crimes and the Act on Prevention of Transfer of Criminal Proceeds, ensuring strict oversight to combat illicit financial activities.Countries also collaborate globally to deter crypto money laundering, forming organizations like the FATF. They are working together for regulatory alignment, information sharing and strengthening AML frameworks.Token issuers also play a crucial role in tackling illicit activities. Notably, stablecoins such as Tether’s USDt (USDT) and USDC (USDC), have built-in mechanisms that allow them to block funds associated with criminal activities, preventing further misuse. How to prevent crypto money laundering Crypto money laundering is evolving and is forcing authorities to adopt advanced blockchain analytics to track illicit transactions. Thus, law enforcement agencies must use sophisticated tools to detect suspicious activity and dismantle criminal networks. Law enforcement has become more adept at tracing illicit transactions, as demonstrated in cases like Silk Road, where blockchain analysis helped uncover criminal operations. However, by working with global bodies like the FATF and the European Commission, authorities can assess high-risk jurisdictions and mitigate threats to the financial system.For crypto service platforms, stringent KYC and AML protocols must be followed, especially for transactions from high-risk areas. Platforms should regularly audit transactions, monitor for suspicious patterns, and collaborate with law enforcement to respond quickly to potential laundering activities.Users also play a role by avoiding transactions with entities operating in high-risk regions and reporting suspicious activities. Familiarizing themselves with secure wallet practices and ensuring their own transactions are traceable (if required) by keeping records can help prevent accidental involvement in illegal activities. Strong cooperation across all parties is key to curbing crypto money laundering.
The Hermit Kingdom, which intelligence agencies say was behind the $1.5 billion Bybit hack, faces “offramping” challenges due to the size of its hauls.
Two Russian nationals face charges of conspiracy to commit money laundering and operating an unlicensed money-transmitting business, while one remains at large.
Kazakhstan shut down 36 illegal crypto exchanges in 2024, seizing $112 million in assets and advancing Anti-Money Laundering efforts alongside its upcoming digital tenge launch.
California resident Ken Liem has accused three banks of failing to perform adequate checks that could have blocked the scammers from opening accounts in the first place.
Ilya Lichtenstein urged his social media followers not to blame his wife — also implicated in money laundering — for the 2016 Bitfinex hack.
According to the latest reports, the United States has made efforts to disrupt illicit crypto-related networks that support North Korea’s government, announcing sanctions against two individuals and one entity in the United Arab Emirates (UAE). The US Treasury Department particularly said the parties acted as front companies for the North Korean regime that performed operations to […]
Hydra market founder Stanislav Moiseev and 15 of his accomplices were jailed for between 8 and 23 years for their involvement in the darknet market and crypto mixer.
Larry Dean Harmon of Ohio was officially sentenced Friday for running the darknet crypto mixer Helix over allegations that he had processed over $300 million worth of crypto tokens from 2014 to 2017. Related Reading: Solana Rising: Key Metrics Hint At Serious Ethereum Competitor Harmon gets a three-year sentence, in addition to forfeiture of assets up to $400 million, for his role in laundering over $300 million worth of Bitcoin tokens for darknet’s drug markets. According to US authorities, Harmon used the platform to help launder the drug dealers’ funds, facilitating the transfer of over 350,000 BTCs from 2014 to 2017. He gets a three-year sentence, a relatively light serving time, but faces a forfeiture money judgment worth $311,145,854 and forfeiture of all seized assets amounting to at least $400 million. A ‘Lighter Sentence’ Over Money Laundering Case According to court documents, Harmon operated Helix from 2014 to 2017 and, during this time, laundered up to $300 million worth of Bitcoins on behalf of drug dealers. After hearing the case and with Harmon’s guilty plea, US District Judge Beryl Howell sentenced Harmon to three years of jail time. In addition to prison time, Harmon will serve a three-year supervised release, pay the court up to $311 million, and surrender all seized assets, including cryptocurrencies and real estate, amounting to at least $400 million. An Ohio man was sentenced to 3 years in prison and ordered to forfeit over $400M in assets for his operating of Helix, a darknet cryptocurrency “mixer.” @DOJCrimDiv #FollowTheMoney #IRSCIhttps://t.co/4IRC4fDbPf — IRS Criminal Investigation (@IRS_CI) November 15, 2024 Helix: Harmon’s Role In Laundering Drug Money Helix was a popular crypto-mixing service on the darknet and a favorite destination of drug dealers who wanted to launder their money. According to a Department of Justice press release, the mixing site processed 354,468 BTCs, or approximately $311,145,854, during transactions. Records show that the bulk of these funds are for darknet drug markets, and some are for customers based in the District of Columbia. Harmon collected a percentage of these transactions as fees and commissions for running the service. Harmon ensured that Helix was linked to Grams, a darknet search engine, and worked with most darknet markets as part of the laundering operations. Harmon used his proprietary API to integrate Helix into the darknet markets’ BTC withdrawal system. He also customized the API to make it more compatible with other markets. Last August 18th, 2021, Harmon submitted a guilty plea for conspiracy to commit money laundering. Related Reading: Bitcoin To $800K? Galaxy Digital CEO Unveils Bold 5-10 Year Forecast Harmon’s Cooperation Paved The Way For A Lighter Sentence Initially, Harmon was facing a possible 20-year sentence, even though the prosecutor campaigned for at least 75 months’ worth of prison time. However, the presiding judge only imposed a three-year sentence, crediting Harmon for his help in this case. This resulted in Roman Sterlingov’s sentencing to 12.5 years last November 8th. Judge Howell acknowledged Harmon’s effort to close the platform two years before the authorities charged him. The court considered this move a sign that Harmon had reformed, even before the case was filed. Featured image from CRI Group, chart from TradingView
Larry Harmon laundered 350,000 BTC, but he was treated leniently for his help in jailing Roman Sterlingov.
Due to the alleged KYC violations, Upbit reportedly faces fines of $71,500 per case in addition to possible issues with Upbit’s business license renewal.
Daren Li oversaw the transfer of more than $73 million away from crypto scam victims to wallets he and his co-conspirators controlled.
The founder of a crypto mixing platform will end up in a US prison cell and will call it home for 12.5 years after a federal court ruled that the crypto firm owner was guilty of money laundering. Related Reading: The $12.1 Billion Trump Effect: Binance’s Changpeng Zhao Cashes In Big The sentence serves as […]
Tether is back in the spotlight, this time for assisting the authorities in solving a crypto crime. According to multiple reports, the stablecoin firm recently helped the Ontario Provincial Police in a crypto robbery worth $10,000 CAD. Tether worked with the Cyber Investigations Team to recover the lost funds, showcasing the company’s increasing commitment to […]
Ireland’s finance minister wants to act quickly before the EU enacts strict Anti-Money Laundering legislation.
Ilya Lichtenstein, who stole 120,000 Bitcoin in a 2016 hack on Bitfinex, should receive a reduced sentence of five-years in prison, prosecutors say.
Crypto exchange Kraken has announced the delisting of Monero in the European Economic Area to maintain compliance with EU regulations.
The ongoing legal saga surrounding Tornado Cash, a cryptocurrency mixing service, has intensified as its co-founders face serious allegations of facilitating money laundering on a massive scale. Roman Storm and Roman Semenov have been charged by the US Department of Justice (DOJ) with running a facility purportedly aiding in the laundering of over $1 billion […]
Two crypto exchanges and two individuals have been sanctioned for ties to underground finance.
German authorities sent a loud and clear message to criminal users of the exchanges: We found their servers and have your data — see you soon.
The dangers of money laundering and other associated crimes have Singaporean authorities stopping the use of crypto for gambling. Related Reading: US Congress Tackles DeFi—What’s The White House’s Position? Singapore’s parliament has passed amendments to the Casino Control Act, designed to further enhance the effectiveness of the country’s casino regulatory regime and its safeguards for […]
Indian authorities have arrested a man for allegedly kidnapping two employees of BitConnect creator Satish Kumbhani and extorting $125 million in crypto.
Indian authorities have arrested a man for allegedly kidnapping two employees of BitConnect creator Satish Kumbhani and extorting $125 million in crypto.
Despite the restrictions in place, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers, the Financial Conduct Authority said.