Investigative Reporter Group ICIJ Exposes ‘Coin Laundry,’ Crypto’s Criminal Financial System

What to know:

• The ICIJ’s series of investigative reports into crypto showed how illicit funds are funneled through major exchanges such as Binance, OKX, Coinbase, Kraken, Bybit and Kucoin.
• More than 100 journalists from more than 35 countries partnered with ICIJ on the project.
• ICIJ media partners include The New York Times, Le Monde, The Toronto Star, Malaysiakini, The Indian Express and the Australian Financial Review.

The International Consortium of Investigative Journalists (ICIJ), a global network comprising hundreds of reporters which helped highlight major money laundering operations such as the Panama Papers, has turned its attention to cryptocurrency, and found an almost inexhaustible trove of iniquity.

The ICIJs series of investigative reports into crypto, dubbed the 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 ICIJ were linked to criminal enterprises across the world including North Korean hackers, Chinese and Russian criminal gangs focused on people trafficking, drug dealing substances like fentanyl, Mexico’s Sinaloa drug cartel, as well as brazenly carried out transactions using “crypto-cash storefront” operations in places like Ukraine and Dubai.

The ICIJ said its findings demonstrate “how the rise of blockchain technology — coupled with the speed, anonymity and global reach of cryptocurrency transactions — has quietly spawned a shadow financial system that operates faster, darker and further beyond the reach of regulators and law enforcement.”

In practise this means a drug cartel, lets say, can easily use a whole new financial system involving dollar-pegged stablecoins, for instance, to move money around, whereas in the old days the criminals would have to stuff cash in to the boot of car, according to one analyst ICIJ spoke with.

“For decades, we’ve shown how hidden money moves through offshore havens. Now we’re revealing how the same forces are exploiting crypto markets to move illicit cash in plain sight,” said ICIJ Executive Director Gerard Ryle in a statement.

“Our investigation raises urgent questions: How complicit are major crypto exchanges in enabling criminal activity? And why are regulators struggling to keep pace with a financial system that thrives on opacity and speed?” he asked.

The cryptocurrency trading world is scrutinized by several large so-called blockchain analytics companies that trace illicit funds and suspect wallet addresses, many of whom are contracted to work with the compliance departments of the big exchanges. The ICIJ investigations appear to have relied on some smaller, independent blockchain sleuths to carry out its 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 the Australian Financial Review.

A spokesman for OKX said the exchange take take the alleged issues seriously and welcomes scrutiny of how exchanges combat illicit activity.

"At OKX, we work closely with law-enforcement agencies around the world and use a layered program that combines experienced compliance professionals, in-house AI–driven monitoring, and on-chain analytics, alongside partnerships with firms such as Chainalysis and networks like Beacon, to identify, restrict, freeze, or refer suspicious activity," the spokesman said.

A spokesperson for Kucoin said as with all major financial institutions — whether traditional banks or digital asset platforms — criminal organizations may attempt to misuse open financial systems. This does not imply complicity, the spokesperson added.

"KuCoin operates a robust, multi-layered AML/CTF program aligned with international regulatory frameworks. We collaborate closely with leading blockchain analytics firms, conduct continuous transaction monitoring, and enforce strict KYC/EDD procedures across all user segments,” the spokesperson said.