U.S. Cuts Back on Crypto Money Laundering Oversight Amid Surging $28 Billion Illicit Flows, ICIJ Reveals
Washington, DC – As the cryptocurrency industry booms under reduced regulation, the U.S. government has significantly downsized the office responsible for scrutinizing exchanges’ safeguards against dirty money, according to a bombshell investigation by the International Consortium of Investigative Journalists (ICIJ).
The ICIJ’s “Coin Laundry” probe, released last November in collaboration with 37 media partners across 35 countries, exposes how at least $28 billion linked to scammers, money launderers, and criminal networks has flooded major platforms like Binance and OKX over the past two years[1][2]. This illicit surge coincides with a regulatory rollback spearheaded by President Donald Trump, who has positioned the U.S. as the world’s “crypto capital” following the launch of his family’s own cryptocurrency venture[1].
Huione Group: A Pipeline for Crime Proceeds
Central to the investigation is Cambodia-based Huione Group, flagged by the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) on May 1, 2025, as a “primary money laundering concern.” Despite this designation – which severed it from the U.S. financial system – Huione continued funneling massive crypto sums to top exchanges[4][5].
ICIJ’s blockchain analysis revealed that from July 2024 to July 2025, Binance customer accounts received at least $408 million in tether (USDT) from Huione, even after Binance’s 2023 guilty plea to U.S. money laundering violations and agreement to court-appointed monitors[3][5]. OKX accounts took in at least $226 million from the same source post its own plea deal in February, including $161 million after FinCEN’s alert[3][5].
“Huione Group lies at the nexus of identity theft, human trafficking, scam, fraud and money laundering,” ICIJ reported, noting estimates of 300,000 people trapped in Southeast Asian scam compounds[5].
Even after FinCEN’s intervention, $77 million flowed to Binance and $161 million to OKX from Huione, underscoring gaps in exchange compliance[5]. Binance responded by claiming leadership in spotting suspicious deposits but declined specifics on frozen funds or account closures[5].
Crypto-to-Cash Desks: No Questions Asked
The probe delved into shadowy “crypto-to-cash” services worldwide, visited by ICIJ reporters. These operations, often requiring minimal ID – like photographing a $5 bill’s serial number – convert digital dirty money to cash anonymously[2].
Analysis of over a dozen such “cash desks” showed major exchanges as key feeders. One Armenian desk’s wallet amassed over $160 million in tether[2]. In Canada, undercover Toronto Star reporting sent 2,000 tether to “001k,” which relayed $400 million to Binance, $54 million to OKX, $13 million to Kraken, and over $1.1 billion to WhiteBIT in two years[2]. Experts deemed this likely illegal under Canadian law[2].
North Korean Hackers and Global Scams
North Korean cybercriminals also exploited platforms. ChainArgos traced over $900 million in stolen ether via THORChain to Binance deposit addresses in just 10 days[3]. Kraken facilitated exchanges for sanctioned figure Elena Chirkinyan, though the firm claims full sanctions compliance[3].
Global partners uncovered devastating scams: In Ecuador, the ADN Business School swindle drained $176 million in 36 cryptocurrencies via Binance wallets, with criminals evaporating funds before seizure – recovering just $500[7]. From Myanmar to Minnesota, victims face emotional and financial ruin without recourse[1].
U.S. Regulatory Retreat
Compounding the crisis, the U.S. has slashed FinCEN’s cryptocurrency examination office as the industry expands[4]. This comes amid Trump’s deregulation push, including vows to cement U.S. crypto dominance[1].
Blockchain analytics firms like Chainalysis, touted by Binance for a purported drop in illicit funds, face criticism for downplaying exchange roles in crime stats[6]. ICIJ found these “watchdogs” hesitant to publicly flag mainstream platforms[3].
| Exchange | Source | Amount (Tether/USDT) | Timeframe |
|---|---|---|---|
| Binance | Huione Group | $408M | Jul 2024–Jul 2025 |
| OKX | Huione Group | $226M | Post-Plea Deal |
| Binance | 001k (Canada) | $400M | Past 2 Years |
| WhiteBIT | 001k | $1.1B | Past 2 Years |
Industry and Regulator Responses
Exchanges insist on cooperation with law enforcement. Kraken highlighted global compliance efforts[3]. Yet, ICIJ questions whether platforms truly police high-risk inflows, as crypto’s pseudonymous nature hinders blocking deposits[5].
Regulators worldwide struggle to match criminal ingenuity and tech evolution[7]. Victims, from scam-hit families to trafficking survivors, demand accountability as dirty money cycles unchecked.
The Coin Laundry underscores a stark reality: While crypto promises innovation, its underbelly enables a shadow economy of terror financing, fentanyl trafficking, and fraud – now under lighter U.S. scrutiny.