The International Consortium of Investigative Journalists (ICIJ), a global network made up of hundreds of reporters that helped highlight major money laundering operations like the Panama Papers, has turned its attention to cryptocurrencies and found a nearly inexhaustible trove of iniquity.
ICIJ’s series of investigative reports on cryptocurrencies, called Coin Laundry, showed how illicit funds are funneled through major exchanges such as Binance, OKX, Coinbase, Kraken, Bybit and Kucoin.
The crypto funds tracked by the ICIJ were linked to criminal enterprises around the world, including North Korean hackers, Chinese and Russian criminal gangs focused on human trafficking, trafficking of substances such as fentanyl, the Sinaloa drug cartel in Mexico, as well as operations brazenly carried out using “crypto cash shops” in places like Ukraine and Dubai.
The ICIJ said its findings demonstrate “how the rise of blockchain technology – along with the speed, anonymity and global reach of cryptocurrency transactions – has quietly spawned a shadow financial system that operates faster, darker and 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 that includes dollar-pegged stablecoins, for example, to move cash, whereas in the old days criminals would have to stuff cash in 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 money in plain sight,” ICIJ executive director Gerard Ryle said in a statement.
“Our research raises pressing questions: To what extent are major cryptocurrency exchanges complicit in enabling criminal activity? And why are regulators struggling to keep pace with a financial system that thrives on opacity and speed?” asked.
The world of cryptocurrency trading is scrutinized by several large blockchain analysis firms that track illicit funds and suspicious wallet addresses, many of which are contracted to work with the compliance departments of large exchanges. The ICIJ investigations appear to have relied on some smaller independent blockchain sleuths to carry out their analysis.
More than 100 journalists from more than 35 countries partnered with ICIJ on the project. Media partners include The New York Times, Le Monde, The Toronto Star, Malaysiakini, The Indian Express and Australian Financial Review.
Coindesk has reached out to Binance, OKX, Coinbase, Kraken, Bybit, and Kucoin for comment.
