{"id":20805,"date":"2026-03-07T18:19:16","date_gmt":"2026-03-07T17:19:16","guid":{"rendered":"https:\/\/drugprevent.org.uk\/ppp\/?p=20805"},"modified":"2026-03-07T18:19:16","modified_gmt":"2026-03-07T17:19:16","slug":"confronting-the-illicit-finance-hydra-in-crypto-markets-protecting-retail-investors-and-disrupting-hostile-government-exploitation","status":"publish","type":"post","link":"https:\/\/drugprevent.org.uk\/ppp\/2026\/03\/confronting-the-illicit-finance-hydra-in-crypto-markets-protecting-retail-investors-and-disrupting-hostile-government-exploitation\/","title":{"rendered":"Confronting the Illicit Finance Hydra in Crypto Markets: Protecting Retail Investors and Disrupting Hostile Government Exploitation"},"content":{"rendered":"
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Submitted by Maggie Petito on behalf of drug-watch-international – 3-3-26<\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Opening Statement by Maggie Petito:<\/em><\/strong><\/span><\/div>\n
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\u00a0Alexander Browder of the UK\u2019s Henry Jackson Society shares a new fully researched report on crypto, \u201ca powerful tool for criminals and hostile governments. They move illicit finances without being caught. This report looks at how these groups use digital currencies to hide their illegal activities, and what this means for global security and law enforcement\u2026\u201d\u00a0 \u00a0 \u00a0 \u00a0<\/em><\/strong><\/span><\/div>\n
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Drug monies now rely on crypto which of course enlarges the criminal range and profiteering. The report notes that ‘stablecoins’ enjoy weaker compliance and oversight, to the criminal’s benefit.<\/em><\/strong><\/span><\/div>\n
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HENRY JACKSON SOCIETY REPORT:<\/span><\/strong><\/div>\n
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Cryptocurrency has become a powerful tool for criminals and hostile governments. They move illicit finances without being caught. This report looks at how these groups use digital currencies to hide their illegal activities, and what this means for global security and law enforcement. It draws on a database of 164 cases from the past 20 years, showing just how large and fast-growing this problem has become.<\/span><\/div>\n
Across these known cases, around $350 billion in illegal funds has been laundered through cryptocurrency. However, the response from authorities has been weak. Only 21% of cases have led to convictions, a third have never faced any legal action, and only 27% of stolen or illegal assets have been recovered. The report shows that stablecoins now play a major role in these schemes, including new coins created specifically to dodge international sanctions.<\/span><\/div>\n
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The problem is heavily concentrated in certain countries. Half of the illicit crypto exchanges were run from Russia. Major ransomware groups are largely based in Russia and Iran, and North Korea earns about a third of its government revenue from illegal crypto operations. At the same time, U.S. law\u2011enforcement seizures of cryptocurrency have fallen sharply, down 95% since 2021.<\/span><\/div>\n
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To tackle this growing threat, the report calls for specialist enforcement teams, stronger asset\u2011recovery systems, public risk alerts for investors, rewards for whistleblowers, and better use of AI to help detect and prevent abuse.<\/span><\/div>\n
Executive Summary:<\/strong><\/span><\/div>\n
This report is the first overview of cryptocurrency-enabled money laundering based on a newly created proprietary database spanning 164 cases across 20 years (2005 to 2025). ..The report is broken down into three different categories reflecting the three traditional stages of money laundering: on-ramps (placement), layering and off-ramps (integration). <\/span><\/div>\n
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The report examines the trends and legal actions for each stage. Within the on-ramps (identified as entry points into cryptocurrency), the report highlights six different mechanisms \u2013 Darknet Marketplaces, Hacks, Ransomware, Ponzi Schemes, ATMs and Criminal Enterprises \u2013 which in total amount to $127 billion at time of occurrence, or $307 billion in present value. $90.2 billion has been seized through successful legal actions by international law enforcement authorities, representing only 29% of the total illicit funds processed through on-ramp channels. Within the layering stage, the report has examined four categories: on-chain, cross-chain, decentralised finance (DeFi) and digital coins. Each involves a range of different techniques and services. This report has highlighted five high-level techniques for on-chain, two techniques for cross-chain and four for DeFi. The most significant use has been in on-chain \u2013 through mixers, with $9.2 billion of illicit funds being moved through 10 mixers. They act as a key instrument for launderers to reduce the trace of their funds. The choice of coin is an important mechanism for layering, and the report presents a detailed table summarizing the key characteristics of the coins most adopted for laundering. <\/span><\/div>\n
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The report discusses 15 highly used instruments, including cryptocurrencies, privacy coins and stablecoins, and identifies particular features that make them susceptible for use in money laundering. The report demonstrates that, historically, Bitcoin (BTC) was the primary currency used for illicit transactions, reflecting its early adoption and dominance in cryptocurrency markets. However, stablecoins are now increasingly preferred, largely due to their reduced price volatility and the availability of off-ramps that, in some cases, operate under weaker oversight and compliance regimes. Within the off-ramps, the Global Cryptocurrency Laundering Database features 14 Centralised Exchanges (CEXs) and over-the-counter (OTC) products, and five payment platforms with a total of $22 billion of illicit outflows. CEXs have become the prominent method for criminals to turn their cryptocurrency into cash, and even regulated exchanges have had serious incidents of large amounts of laundering. From legal actions targeting off-ramp services, authorities have seized less than $500 million\u2026With the banking system becoming well regulated, criminals looked for additional ways to launder money. Following the emergence of cryptocurrency, new opportunities to launder funds developed.<\/span><\/div>\n
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As the volume of cryptocurrency transactions soared, so did their use as a money laundering tool, representing a new, less understood and less regulated channel to move money\u2026First, money has to enter the virtual space through different channels known as on-ramps. Bad actors may also leverage existing cryptocurrency holdings that are already present in the ecosystem, rather than acquiring new funds through external on-ramps. Next, the funds are typically obfuscated to reduce traceability back to their source. This process takes place through a variety of distinct layering patterns. Once the funds have been \u2018cleaned\u2019, most bad actors attempt to move the funds off the chain into fiat (via off-ramps), in order to completely break the traceability of the source and the funds\u2026In conclusion, illicit marketplaces represent a major entry point for funds into the crypto currency ecosystem, and some platforms further integrate laundering mechanisms as an additional service.<\/span><\/div>\n
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Source: www.drugwatch.org … drug-watch-international<\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Submitted by Maggie Petito on behalf of drug-watch-international – 3-3-26 \u200b\u200b Opening Statement by Maggie Petito: \u00a0Alexander Browder of the UK\u2019s Henry Jackson Society shares a new fully researched report on crypto, \u201ca powerful tool for criminals and hostile governments. They move illicit finances without being caught. This report looks at how these groups use […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[32,82,142,128,19],"tags":[],"class_list":["post-20805","post","type-post","status-publish","format-standard","hentry","category-crime-violence-prison","category-economic","category-latest-news","category-uk","category-usa"],"_links":{"self":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts\/20805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/comments?post=20805"}],"version-history":[{"count":2,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts\/20805\/revisions"}],"predecessor-version":[{"id":20807,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/posts\/20805\/revisions\/20807"}],"wp:attachment":[{"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/media?parent=20805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/categories?post=20805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/drugprevent.org.uk\/ppp\/wp-json\/wp\/v2\/tags?post=20805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}