U.S. Gutted Crypto Enforcement as $28 Billion in Dirty Money Floods Major Exchanges, ICIJ Probe Reveals
Washington, D.C. – An explosive investigation by the International Consortium of Investigative Journalists (ICIJ) has exposed how at least $28 billion in illicit funds from scammers, money launderers, drug traffickers, and North Korean hackers has poured into major cryptocurrency exchanges like Binance and OKX over the past two years, even as the U.S. government slashed oversight amid the industry’s rapid expansion.[1][4]
The ICIJ’s “Coin Laundry” series, published last November in collaboration with 37 media partners across 35 countries, paints a stark picture of a crypto ecosystem awash in “dirty money.” Platforms such as Binance, OKX, Bybit, and Kraken have become inadvertent – or perhaps willful – hubs for criminal proceeds, with blockchain analysis revealing massive inflows from high-risk sources.[2][3]
Rollback of U.S. Regulation Coincides with Crime Surge
As the cryptocurrency sector boomed under reduced scrutiny, the U.S. took dramatic steps to dial back enforcement. Last April, the Trump administration disbanded a key Justice Department unit dedicated to investigating crypto-related crimes, stating it would no longer pursue actions against the platforms themselves, only the individuals or enterprises using them for illicit activities.[4]
This came alongside dropped enforcement actions against over a dozen crypto firms and pardons for several executives who had pleaded guilty to anti-money laundering violations. The moves followed President Trump’s launch of his own cryptocurrency venture with his sons and vows to position the U.S. as the world’s “crypto capital.”[1][4]
ICIJ reports highlight the timing: Even after Binance’s 2023 guilty plea to U.S. money laundering laws and agreement to court-appointed monitors, its accounts received at least $408 million in tether from Cambodia’s Huione Group – flagged by the U.S. Treasury in May 2025 as a “primary money laundering concern” linked to human trafficking and scam operations.[3][4][5]
OKX customer accounts similarly took in $226 million from Huione post its February plea deal for operating an illegal money transmitter.[3] In another case, Binance deposit addresses saw a $900 million spike in ether from THORChain, a platform exploited by North Korean hackers to launder stolen funds.[3]
Crypto-to-Cash Desks Fuel Shadow Economy
ICIJ investigators went undercover, visiting over a dozen “crypto-to-cash” desks – shadowy storefronts from Dubai to Toronto that convert digital assets to cash with minimal identification. These operations, often requiring no more than a photo of a bill’s serial number, have become a new frontier for laundering.[2]
Analysis of wallets linked to these desks showed major exchanges as key senders of large sums. One Armenian desk racked up $160 million in tether transactions over two years.[2] In Toronto, undercover reporters sent 2,000 tether to a service called 001k, which instructed them to present a specific five-dollar bill at pickup – a method experts say likely breaches Canadian anti-money laundering laws.[2]
001k accounts funneled over $400 million to Binance customers, $54 million to OKX, $13 million to Kraken, and a staggering $1.1 billion to WhiteBIT in two years.[2] U.S.-based Kraken even provided an account used by a figure sanctioned by the Treasury for bulk exchanges.[3]
Global Scams and Victims Left in the Lurch
The probe uncovered devastating scams worldwide. In Ecuador, the ADN Business School swindled $176 million in cryptocurrencies, with funds traced to Binance wallets that vanished before prosecutors could seize them – leaving victims with just $500 recovered.[6]
From Myanmar operations reaching Minnesota to fentanyl traffickers and terrorists, the funds trace back to diverse crimes.[1][2] Victims face emotional and financial ruin, with little recourse due to crypto’s untraceability and lax platform safeguards.[1]
Even blockchain analytics firms like Chainalysis, touted by Binance in a November report claiming reduced illicit funds, have been reticent to publicly flag mainstream exchanges.[3][5] Binance’s self-reported drop in dirty money omitted key stats on ongoing inflows from flagged entities.[5]
Industry Watchdogs Question Compliance
“Do the major crypto exchanges have any idea where the money is going when they send big transactions to high-risk cash desks? And do they care?” ICIJ posed.[2] Exchanges like Kraken claim cooperation with law enforcement and sanctions monitoring, but the data suggests gaps.[3]
As regulators struggle to match crypto’s pace, the ICIJ calls for stronger global action. The probe, covered by The New York Times and others, underscores the tension between innovation and crime in a market now intertwined with U.S. policy shifts.[1][9]
Cryptocurrency’s promise of financial freedom has morphed into a haven for the unscrupulous, with billions in dirty money exposing regulatory blind spots. As the industry eyes further growth, questions loom over whether oversight will catch up – or if the U.S. pivot to deregulation has opened the floodgates for good.[1][4]