According to the findings of an investigation conducted by the United States Drug Enforcement Administration (DEA), a drug cartel that had operations in multiple countries utilized Binance to move millions of dollars in unlawful revenues.
Forbes said (1) that the probing agency has asserted that the gang's gains may be as high as $40 million if they were laundered through the cryptocurrency exchange Binance. Because of this, the largest exchange in volume is now a focus of an important money-laundering investigation.
Million of Cartel Dollars Laundered Using Binance
The news organization asserted (2) that the exchange is working closely with the government agency to investigate the crime after receiving massive investment from Binance for $200 million this year.
According to the search warrant that was received by the media, the investigation was initiated way back in the year 2020. It was alleged that official sources inside the agency discovered linkages in the investigation when a user tried to perform a straightforward cash-for-cryptocurrency transaction.
According to the findings of this report, the trader lied about where the monies originated, claiming they were from family restaurants and cattle farms. According to reports, the individual was taken into custody in 2021. The activity trail with the undercover operative almost immediately after that uncovered the account utilized to launder money.
The account discussed earlier made 146 bitcoin purchases totaling more than $42 million in 2021, and it sold more than $38 million worth of cryptocurrencies using 117 different sell orders, as stated in the search warrant. According to estimates provided by the Drug Enforcement Administration (DEA), the sale of drugs contributed at least $16 million to this income.
Informants working for the DEA can be found on different internet trade platforms, such as LocalBitcoin.com. In addition to the United States and Mexico, the Mexican gang is believed to be active in Europe and Australia. According to the report, the cartel's primary business is the distribution of cocaine and methamphetamine.
Binance's Constant Struggles with Regulatory Agencies
The Chief Executive Officer of Binance, Changpeng Zhao, stated in a tweet that the transparency of blockchain works against outlaws and may not be a viable instrument for engaging in illegal activities. A man in South Korea was brought (3) to justice at the end of the previous month for purchasing illegal substances with crypto currency.
In a blog post (4) from May, Binance announced that the crypto currency exchange had assisted the United States Drug Enforcement Administration in seizing over one hundred accounts associated with illegal drug dealers.
Binance, on the other hand, has been struggling with several regulatory concerns for some time. Recently, Reuters published (5) an article stating that Binance was hiding its deals from the general public by quoting the corporate documents of the exchange. It was asserted that in 2022, transactions with a total value of about $22 trillion seemed to be the "black box" of the exchange.
Previously, the news site asserted that the United States Department of Justice was investigating potential violations of money laundering laws by Binance.
Binance announced that it had joined the Chamber of Digital Commerce to campaign for support through the digital asset association.
In light of this, regulators are strengthening restrictions to prevent illicit funds laundering and stop funding terrorist organizations.
According to the research published in 2022 by Chainalysis, the year 2021 was the year in which criminal activity involving cryptocurrency reached its height, with illegal addresses acquiring a total of $14 billion.