With the Trump administration aiming to make the United States the “crypto capital” of the world, relaxed regulations are leading to a quick uptick of dirty money on crypto exchanges and the potential for tax crime and a wide range of other illegal activities.
In its recent investigation into how crypto businesses and criminals profit by working hand in glove, the Investigative Consortium of Investigative Journalists (ICIJ) identified approximately $28 billion in dark money flowing through crypto platforms over the past two years. The ICIJ, the same organization behind investigations such as the Pandora Papers and the Panama Papers that revealed widespread money laundering and tax evasion, has just released its new investigation, The Coin Laundry.
The Coin Laundry investigation was conducted in 35 countries with 37 media partners. Journalists collected hundreds of cryptocurrency wallet addresses from a wide range of sources, including law enforcement, sanctions lists and victims of cyber scams. Tying the addresses to tens of thousands of transactions that took place around the world provided a view of the free-for-all flow of money moving through the decentralized, virtually unregulated world of crypto exchanges.
Big business gets bigger
One of the biggest players in the cash and crypto business is the cryptocurrency exchange Binance, currently considered the world’s largest crypto exchange. On its website, Binance states its average daily volume is $65 billion. Following the 2022 meltdown of the crypto exchange FTX, federal regulators turned their attention to Binance. Binance founder, Changpeng Zhao, known as CZ, entered a guilty plea, paid a $4 billion fine, resigned from the company and served a four-month prison term. Binance agreed to operational changes and five years governmental supervision.
Despite supervision, the ICIJ identified hundreds of millions of dollars moving through Binance associated with Cambodian interests set up to service criminal enterprise. Because of the volume of legitimate cryptocurrency moving through cryptocurrency exchanges, they can serve as effective money laundering mixers for bad actors.
Along with his crypto start-up World Liberty Financial, Mr. Trump and his family are positioned to profit from the crypto boom and its relationship with the Binance platform. In October, Mr. Trump pardoned CZ.
Ultimate cash grab or good business? The overall loosening of regulations throughout the federal government has created a lot of opportunity. Staying compliant can be difficult in a fast-paced game. When you have questions—speak with an experienced tax attorney for advice.
Interested in offshore but steering clear of money laundering? Speak with our legal group
Exploring a new offshore account, or wondering about required reporting? The tax attorneys at Robert J. Fedor, Esq., L.L.C. can help. Contact us at 440-250-9709 or set up a consultation for reliable counsel. We offer services to clients in Northeast Ohio, Chicago, New York, and internationally.
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