Drug dealers have used Binance to launder illicit revenue according to the Drug Enforcement Administration.
It is between 15 and 40 million dollars that a Mexican gang specializing in cocaine and methamphetamine would have passed through the cryptocurrency platform.
It all starts on LocalBitcoin…
The investigation conducted by the federal agency, the American equivalent of Narcotics, in collaboration with Binance, shows how drug traffickers are trying to exploit the development of the cryptocurrency universe to their own advantage.
In order to be able to transform their cash into crypto, drug traffickers have called, from 2020, on the LocalBitcoin.com platform, which offers, among other things, to put its customers in contact with holders of crypto-currencies agreeing to resell them against cash. In this file, it was a Mexican citizen named Carlos Fong Echavarria who was in charge of liaising between the two parties.
In order not to arouse the suspicions of those who sold him bitcoins or USDC (a stablecoin pegged to the dollar), he explained that the money came from ” family restaurants and livestock farms “. Arrested last year, this matchmaker has since pleaded guilty to charges of drug trafficking and money laundering.
Crypto remains a solution little used by traffickers
The investigators were also able to continue their investigations, and come across another account extending the operations of Carlos Fong Echavarria, and whose author was identified thanks to Binance.
In 2021, this second account made a total of 146 cryptocurrency purchases, representing nearly $42 million, and placed 117 sell orders, for $38 million. $16 million is believed to be drug revenue, with the DEA not detailing the origin of the other funds.
According to Matthew Pric, the director of investigations for Binance interviewed by Forbes, this case shows the increased interest of cartels in cryptocurrencies, which previously only used these services for transactions of a few tens of thousands of dollars. ” This is actually an example where the transparency of blockchain transactions works against criminal actors. “, he added.
However, cartels still strongly prefer cash to preserve the profits of their transactions. ” On a larger scale [le blanchiment de crypto] is still completely eclipsed by cash and other means, simply because of the sheer volume of money involved “, argues Matthew Price.
Source : Forbes
10