The New York Times | The crypto industry is gaining mainstream acceptance and popularity in the financial world. But the speed and anonymity of crypto have long been popular with criminals, who exploit exchanges to launder money. At least $28 billion tied to illicit activity has moved into crypto exchanges over the last two years alone.

The International Consortium of Investigative Journalists (ICIJ), including The New York Times and 36 other news organizations, collaborated to trace tens of thousands of crypto transactions.

Where does the money come from? Cybercriminals, including hackers, thieves, scammers, and extortionists, use crypto exchanges to move money worldwide.

Where does the money go? Criminal groups have moved money onto the world’s largest exchanges, including Binance, OKX, and at least eight more prominent exchanges. It’s hard to tell what happens to the money once it’s in an exchange because the money trail is hidden.

What are crypto exchanges? Crypto exchanges are online marketplaces where people can convert U.S. dollars or euros into Bitcoin, Ether, and other digital coins. They now handle billions of dollars in legitimate transactions every day, but criminal activity dominated early use of the digital currencies. Exchanges profit by charging transaction fees, usually as a percentage. Crypto transactions are recorded on a public ledger, allowing the movement of funds to be traced to individual exchanges. Once the money is in the exchanges, the trail is hidden.

Scams and Crypto Exchanges

Crypto often comes up in discussions about the scam industry. Many pig-butchering scams are based on fake crypto investment opportunities. The FBI reports that crypto investment fraud cost victims $5.8 billion in 2024 alone. Crypto exchanges are supposed to verify customers before opening accounts, using a process called “know your customer” (KYC).

Scammers often create fake accounts for money mules, people who are paid to move money from one account to another. In a case related to a Minnesota victim, two people holding the actual accounts were located in a small Chinese village and rural Myanmar. Combined, the two women moved $9 million.

“There’s nothing that appears legitimate about this in any way,” said Erin West, a former prosecutor and founder of Operation Shamrock, who reviewed the files for The Times and the ICIJ. “We see this all the time.”

Meanwhile, “crypto-to-cash” storefronts provide a new way to launder money. Anyone can walk into one of the businesses and exchange crypto for traditional currency, often without providing ID. Last year, these businesses processed more than $2.5 billion in Hong Kong alone, according to crypto analytics firm Crystal Intelligence.

Binance, OKX, and Bybit received more than $500 million from the storefronts in 2024.

ICIJ gathered crypto wallet addresses used by more than a dozen such storefronts in Ukraine, Poland, Canada, and the United Arab Emirates. Transaction records show most received funds from the major exchanges.

The Administration and Crypto

President Trump has stated he will make the United States the world’s “crypto capital.” Meanwhile, the Trump administration has made it harder for U.S. law enforcement to prosecute crypto crime. In disbanding a crypto enforcement team, the Justice Department advised law enforcement to focus on the organizations that use crypto, rather than pursuing accountability from “the platforms that these enterprises utilize to conduct their illegal activities.”

Binance, the world’s largest crypto exchange, agreed to pay a $4.3 billion penalty after pleading guilty in 2023 to processing money laundering transactions for terrorist groups.

Earlier this year, Binance was part of a $2 billion business deal with President Trump and his family earlier this year. In October, President Trump pardoned Binance founder Changpeng Zhao (CZ) after he served four months of a sentence related to the plea.

What the Analysis Discovered

Findings in the ICIJ project with The Times included:

Binance has received more than $900 million this year from a platform used by North Korean hackers to launder stolen money. It has also received more than $400 million from Huione Group, a Cambodia operation known for criminal activity.
OKX received mover $220 million in deposites from Huione just months after a $504 million settlement for violating a U.S. money-transmission law.
Crypto exchanges worldwide received at least $4 billion linked to scams in 2024, according to data from Chainalysis.

Full article: The Crypto Industry’s $28 Billion in ‘Dirty Money’