Identified $312 billion of suspected Chinese money laundering activities in American banks - Cryptocurrency continues to be labeled as illicit

In the ever-evolving world of finance, the intersection of cryptocurrency and traditional banking has become a hotbed for illicit activities. Here are some recent examples that highlight this complex relationship.

Last year, the FBI successfully recovered $2.3 million in Bitcoin ransom payments from the Colonial Pipeline attack by tracing the coins on-chain. This incident underscores the potential of blockchain technology to aid in the recovery of stolen funds, but also exposes the vulnerability of such systems to criminal exploitation.

However, not all cryptocurrency businesses are equally accountable. In 2022, the U.S. Treasury sanctioned Tornado Cash, a cryptocurrency mixer service, alleging it had facilitated over $7 billion in laundering since 2019. The sanctions came with a harsh warning, signalling a growing concern over the role of such services in money laundering activities.

Despite this, some traditional banks continue to operate, albeit with a history of enabling illicit flows. Deutsche Bank, for instance, has been penalized multiple times, including its involvement in the Danske Bank scandal. Yet, the bank continues to operate, periodically issuing assurances about compliance improvements while absorbing fines as operational costs. The consequence for such failures was a $1.9 billion fine and a deferred prosecution agreement for HSBC in 2012, a case involving serious anti-money-laundering failures that enabled Latin American drug cartels to wash at least $881 million in cocaine profits.

The takedown of Hydra, the largest darknet marketplace in 2022, relied heavily on tracking crypto flows. Authorities also dismantled the Bitzlato exchange, a small platform accused of processing $700 million in illicit funds. These incidents underscore the global efforts to combat financial crimes in the digital age.

Yet, the fight against illicit activities is far from over. In 2023, two of Tornado Cash's developers were arrested and charged with helping to launder over $1 billion. Meanwhile, Chinese networks concealed and laundered at least $20 billion through U.S. banks between 2020 and 2024, as revealed by a FinCEN investigation.

In conclusion, the battle against illicit activities in the financial sector, whether traditional or cryptocurrency-based, is a continuous one. Crypto businesses face rapid shutdowns, sanctions, and criminal charges when touched by illicit activity, while some traditional banks continue to operate despite repeated failures in compliance. As the landscape evolves, so does the need for vigilance and regulation to ensure a secure and transparent financial system for all.

Identified $312 billion of suspected Chinese money laundering activities in American banks - Cryptocurrency continues to be labeled as illicit