Cryptocurrency was once hailed as a radical, positive force for financial freedom, a way to bypass traditional banks, democratize access and innovate the future of money. But a sweeping new investigation by the International Consortium of Investigative Journalists (ICIJ) reveals a darker truth: Many major crypto platforms are deeply entangled with illicit finance, letting money launderers, scam rings, and even state-backed hackers exploit the system at scale.
Inside the “Coin Laundry”
Over ten months, ICIJ and its partners in 35 countries analyzed hundreds of cryptocurrency wallet addresses associated with crime, from darknet markets to scam syndicates. Their investigation, dubbed The Coin Laundry, traced tens of thousands of blockchain transactions and exposed how criminals use some of the world’s largest exchanges as a bridge between stolen or illicit funds and “legitimate” accounts.
Some of the headline findings, which are shocking:
- Binance, the world’s biggest exchange, received more than $408 million in tether (USDT) from Huione Group, a Cambodian institution that U.S. authorities had flagged as a “primary money laundering concern.”
- Despite a 2023 guilty plea and court-appointed monitors, Binance allegedly continued accepting huge volumes of deposits linked to organized crime.
- OKX, another major platform, also received hundreds of millions in suspect funds from the same group, even after agreeing to pay penalties and boost compliance.
- ICIJ linked transactions to North Korean hackers, Russian money launderers, and even large-scale scam centers operating across Southeast Asia.
- Beyond exchanges, so-called “cash desks” and courier services, places where users convert crypto into physical cash, play a crucial role in laundering, largely outside the regulatory spotlight.
The very platforms that made crypto easy and accessible are also enabling a growing shadow economy. Victims of fraud are often left stranded. One scam survivor, Carrissa Weber, lost more than $25,000, and said her case “is sitting in a filing cabinet and no one’s doing anything with it.”
Lines of defence or loopholes?
Exchanges say they invest heavily in anti-money laundering (AML) tools. OKX, for instance, told ICIJ it uses AI-driven monitoring systems and works with blockchain analytics firms to flag suspicious activity. But former compliance staff paint a troubling picture: high alert volumes, limited resources, and alerts that simply overwhelm compliance teams.
One former Binance compliance analyst said their team often reviewed tiny transactions (just a few dollars), while ignoring larger flows that might carry risk. That speaks to a deeper tension, compliance costs money, but so does losing customers. For exchanges, turning away criminal actors means sacrificing revenue.
Real people, real loss
Behind these massive flows are human stories. ICIJ interviewed dozens of scam victims across continents:
- Carrissa Weber (Canada) borrowed against her home, sent her savings in crypto, and was told she was unlikely to recover anything.
- Asako Nishizaki (Japan), a retiree, lost more than $74,000 to a romance scam, sending funds to wallets that funneled into major exchanges.
- A Minnesota father lost more than $1 million to a fake crypto investment — and law enforcement could only trace about half of it to accounts on Binance and other platforms.
These are not fringe cases. They are emblematic of a broader system in which regulation lags behind exploitation.
What this means for businesses
If you run a business that touches crypto, whether directly, as a service provider, or indirectly, the implications of ICIJ’s findings are profound.
- Regulatory risk is real
Criminals are moving large sums through mainstream exchanges. Regulators will increasingly scrutinize platforms and by extension, anyone who relies on them. Expect higher AML standards, tougher licensing, and more rigorous transaction monitoring. - Reputation matters
Associating with or relying on exchanges implicated in illicit flows can damage your brand. As investors, partners, or customers become more wary, the reputational cost of ignoring these risks could outweigh short-term gains. - Due diligence must go deeper
Whether you’re onboarding crypto firms, using their services, or integrating them into your operations, basic checks may no longer suffice. A wallet address, even on a reputable exchange, can be tied to laundering networks. Businesses need to adopt robust due-diligence frameworks. - Liquidity risk
Exchanges could face regulatory crackdowns or reputational backlash, potentially restricting access or support for certain coins or services. That could affect liquidity and operational continuity for businesses depending on them. - Advocate for better regulation
The system needs reform. ICIJ’s investigation underscores the need for global, consistent crypto regulation. Businesses should engage with regulators, contribute to policy debates, and support frameworks that balance innovation with safety.
Navigating the regulatory landscape
ICIJ’s Coin Laundry also provides a powerful explanatory tool. Their global guide to crypto regulation maps how different jurisdictions approach crypto, from total bans to open embrace. For businesses operating globally, this guide is a must-read. It helps you understand not just where crypto stands today, but where it might go as governments catch up.
As ICIJ shows, the decentralized promise of crypto doesn’t erase risk and it can amplify it. The platforms that once featured as beacons of innovation now demand far more vigilance, responsibility and ethical clarity.
Innovation and shadows
The ICIJ investigation does more than expose wrongdoing. It also forces a reckoning. While crypto promised a frontier of innovation, it has become a conduit for crime and ambition, all lurking just below the surface of sleek user interfaces and flashy branding.
For businesses, that means a new imperative to engage with crypto not just as a technology, but also as a regulated ecosystem. Embrace compliance, due diligence and transparency. And use the insights from The Coin Laundry to shape your strategy, reduce risk and protect those who rely on you.
Cryptocurrency is surging back into the spotlight, and with it comes a wave of regulatory and financial crime risks that businesses must be prepared to handle. This comprehensive guide explores the evolving landscape of crypto compliance, offering key insights into the latest threats, global regulations, and money laundering risks. Get it here.
