Cryptocurrency Exchanges and Money Laundering

Cryptocurrency Exchanges and Money Laundering

Recently, President Donald Trump provided an official pardon to Changpeng “CZ” Zhao, the founder of the world’s largest cryptocurrency exchange. According to the Trump administration, Zhao’s prosecution was nothing more than a Biden political witch hunt, but evidence suggests otherwise.

In 2023, Zhao pleaded guilty to charges related to allowing his Binance cryptocurrency exchange to operate without basic safeguards, which essentially facilitated illegal and dangerous money laundering operations.

According to court records, Zhao’s actions created a marketplace that authorized transactions linked to terrorists, cybercriminals, and child abusers.

Once these facts came to light, Zhao agreed to step down as CEO. His company, Binance, pledged to change and develop safeguards to prevent money laundering on the platform, but it’s clear that no efforts have been made to do so. The company was under court-appointed supervision, and while the supervision was ongoing, at least $408 million worth of cryptocurrency was funneled through the platform by the Huione Group. The Huione Group is a Cambodia-based financial firm that’s often used by Chinese criminal gangs to launder money earned from human trafficking operations.

Shockingly, Binance is not the only cryptocurrency exchange under fire. OKX, another huge cryptocurrency exchange, also recently pleaded guilty to operating as an illegal money transmitter. While under court-appointed supervision, OKX received more than $161 million directly from Huione.

One of the biggest problems for these cryptocurrency exchanges, according to the various companies themselves, is that there is no current technology that would allow them to block deposits into their system. Instead, the companies must take steps after money is deposited to restrict the money or the movement of that money. As it stands, they can freeze funds, close accounts, or monitor transactions, but they can’t stop money from being deposited into their exchanges.

Unfortunately, many victims of online scams also lose their money once they deposit it into cryptocurrency exchanges. These victims often have little to no recourse at all. Unlike normal bank deposits, deposits into cryptocurrency exchanges are not federally insured.

While many regulators have been pushing for these exchanges to implement anti-money laundering safeguards, most companies have failed to do so because taking action would result in a loss of revenue from transaction fees. These crypto companies continue to profit from illegal activities with little fear of consequences, especially considering the recent pardon provided by President Trump.

In 2024 alone, the FBI estimates Americans lost over $9.3 billion to crypto crimes.

Have You Lost Access to Your Cryptocurrency?

Cryptocurrency remains the wild, wild west of monetary exchanges, especially due to the lack of protection for consumers. If you’ve ever dealt with cryptocurrency, then you might be able to relate, especially if you’ve ever lost access to a digital wallet or lost cryptocurrency on the World Wide Web.

Thankfully, our team here at Bitcoin Recovery Co. is dedicated to helping customers like you regain access to their digital wallets, recover lost cryptocurrency, and resolve complex cryptocurrency cases.

Get started on your case now by leaving your contact information on our online form.