According to the US Drug Enforcement Administration (DEA), a global drug cartel used the popular cryptocurrency exchange Binance to launder $15 to $40 million in illicit profits.
A recent Forbes report reveals that a gang dealing in methamphetamine and cocaine that operated across countries and continents, specifically the US, Mexico, Europe, and Australia, used Binance to launder their drug proceeds.
According to Forbes, the investigation into the cartel’s use of Binance began in 2020, when DEA informants offered cryptocurrency in exchange for fiat currency to a user on a different crypto trading platform. At the time, several DEA informants using the crypto trade forum localbitcoins.com conversed with a user who offered to exchange crypto for cash.
The operation was that the individual would send Bitcoin (BTC) or USD coin (USDC) to the seller’s account and then meet in person to collect the cash. The trader was identified as Mexican national Carlos Fong Echavarria, who claimed the money came from “family restaurants and cattle ranches.”
Echavarria later pleaded guilty to money laundering and drug dealing charges. Binance assisted the agency by tracking Echavarria’s blockchain trading activity, which totalled $4.7 million. According to the warrant, they were able to identify an additional account receiving funds from Echavarria by monitoring on-chain activity.
Another account holder, who has not been formally charged, allegedly purchased nearly $42 million in cryptocurrencies, at least $16 million of which came from drug money.
This is really an example where the transparency of blockchain transactions works against criminal actors,” said Matthew Price, senior director of investigations at Binance. “Bad people are leaving a permanent record of what they’re doing. he added.
Meanwhile, Reuters reported that Binance may be investigated by the US Department of Justice (DOJ), but a company spokesperson said any DOJ investigation was “fueled with false insinuations.”