Editor's note: Casey Michel is the author of “American Kleptocracy: How the United States Created the Largest Money Laundering Scheme in World History”, and is working on a book that investigates the foreign lobby in Washington. The opinions expressed in this article are his own. View more opinion on CNN.
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He news last week Money laundering charges against cryptocurrency exchange Binance and its CEO Changpeng Zhao sent shockwaves through both financial markets and cryptocurrency consumers. And it is understandable that this is so. Before Binance's settlement with US authorities, the company accounted for 60% of the market for spot trading of cryptocurrencies. And Zhao himself, as the Wall Street Journal noted, was the so-called "king”of cryptography.
No more. With US authorities imposing sanctions of more than $4 billion on the company, Binance risks becoming a shell of its former self. And Zhao joins a list of once-feted crypto bosses who have since he fell from grace.
But while many analyzes have focused on what this means for the future of the crypto industry itself, or if the industry can even recover of such stupendous scandals: observers risk missing the forest for the trees about what good news this deal is. The actions by US authorities against Binance and Zhao illustrate that Washington is finally taking the threat of transnational money laundering in cryptocurrencies seriously, and that the United States is finally focusing on tackling one of the favorite tools that kleptocrats, oligarchs depend on and dictators from all over the world. about wash your wealth, evade sanctions and finance everything from terrorism to antidemocratic crusades.
Just look what binance and Zhao, and who they are accused of enabling. american authorities alleged that the crypto giant enabled terrorist financing of the Al-Qassam Brigades of Hamas, Al-Qaeda and ISIS, along with child sexual abuse and narcotics transactions. U.S. authorities uncovered networks connected to illicit Russian finances as well as sanctioned Iranian entities.
Altogether, the details are striking. But to those familiar with the history of modern money laundering, they are not surprising. Binance may be the most exposed cryptocurrency house, but it is simply the latest in a long line of financial institutions whose lack of money laundering oversight (and willingness to look the other way) has attracted staggering amounts of illicit wealth and attracted the main companies in the world. criminal networks and kleptocratic regimes.
If anything, this is a pattern we've seen time and time again over the past few decades, and it's not unique to cryptocurrencies. Whenever an industry emerges without sufficient anti-money laundering controls, it begins to absorb illicit finances, laundering untold wealth in the process and, as a result, often leading to spectacular scandals.
Take the American banking sector as an example. At the end of the 20th century, American banks They were an effective all against all, with no internal anti-money laundering controls, giving everyone from dictators to terrorist organizations reasons to turn to American banks to hide and launder their wealth. It was only after the 9/11 attacks – and questions about How the kidnappers used the American banking system. to finance their attack: that the legislators passed the Patriot Actwhich effectively cleaned up American banks, forcing them to perform basic due diligence on customer funds.
Or look at American real estate. thanks to a exemption Since money laundering controls - an exemption that was supposed to be "temporary" but has remained in place for more than two decades - the US real estate sector has skyrocketed into a reference vehicle for the world's main oligarchs and kleptocrats. Over and over again, everything from manhattan skyscraper to Malibu Beach Fronts to Midwest Manufacturing Plants They have supposedly harbored illicit wealth, easily and anonymously. Only in recent years have U.S. officials finally moved towards the cleanliness of the industry.
Other industries, from private equity and hedge funds to auction houses and the art market, have followed similar patterns. And now, thanks to the actions of the US authorities, it seems to be the turn of cryptocurrencies.
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In a sense, this was always inevitable. After all, the spirit of cryptocurrencies was not only to make transactions more secure, but also offer anonymity to anyone who wanted it, all as a way to evade those who try to track funds. And, without a doubt, many target populations of repressive governments depend on cryptocurrencies for finance your efforts and deal with crises.
But cryptocurrencies were also, in many ways, the perfect tool for kleptocrats and criminals trying to evade sanctions and elude investigators. (Like one Binance Employee wrote, the company should have a sign saying: "it's laundering too much drug money these days; come to Binance, we've got cake for you.") And given that dirty money is always looking to be laundered, it's no surprise that the titan of the crypto world supposedly attracted the most nefarious groups and regimes around the world.
Now, however, those heady days appear to be coming to an end. Like banks, real estate and more before it, the cryptocurrency industry's best days as a haven for money laundering may be behind it. All it took was for US authorities to finally recognize that the industry's transformation into a sieve of illicit wealth made it the best friend of kleptocrats and terrorists around the world.
