According to TechRepublic, a massive investigation by the International Consortium of Investigative Journalists, The New York Times, and 36 partner newsrooms has uncovered that at least $28 billion linked to illicit activity flowed into cryptocurrency exchanges over the past two years. The investigation found that Binance received over $400 million from wallets tied to Huione Group, a Cambodian conglomerate flagged by the U.S. Treasury for criminal operations, plus another $900 million from services used by North Korean hackers. OKX received over $220 million from Huione shortly after its own $504 million settlement with U.S. authorities. The timing is particularly awkward given President Trump’s recent launch of his own crypto venture and his promise to make the U.S. the “crypto capital” of the world.
The Cleanup That Wasn’t
Here’s the thing that really gets me about this investigation. We keep hearing how crypto has grown up, how it’s professionalizing, how the bad old days are behind us. But the numbers tell a different story entirely. Exchanges processed $4 billion linked to scams just last year. That’s not small-time stuff – that’s institutional-scale money laundering happening in plain sight.
And let’s talk about the enforcement environment. The Justice Department actually disbanded a key crypto enforcement unit back in April, telling prosecutors to focus narrowly on terrorists and drug traffickers while avoiding cases that scrutinized the platforms themselves. Basically, they took the cops off the beat right when the criminals were getting more sophisticated. You can’t help but wonder if this was intentional or just spectacularly bad timing.
The North Korea Problem
This is where it gets really concerning. North Korea’s Lazarus Group pulled off the largest crypto theft in history back in February – $1.5 billion from Bybit. ChainArgos, a tracking firm, noticed something interesting: a parallel spike of $900 million in Ether entering five Binance deposit accounts during exactly the same period. The firm’s CEO said even a “defective” screening tool should have caught that pattern.
But here’s the kicker – exchanges have financial incentives not to be too aggressive about kicking off bad actors. As University of Texas expert John Griffin pointed out, criminal activity represents significant trading volume and revenue. When you’re running a business that profits from transaction fees, there’s always going to be tension between compliance and profitability.
The Human Cost
Behind all these billions are real people getting wiped out. The FBI reported $5.8 billion in crypto investment fraud losses last year alone. One Minnesota father lost $1.5 million to a fraudulent scheme. Over $500,000 of his stolen money ended up on major exchanges. Another victim, a 58-year-old Canadian woman, lost her entire life savings – $25,000 – to a scammer pretending to be a tech entrepreneur. Her funds went into OKX, which didn’t freeze the accounts for months.
And then there are the crypto-to-cash operations that make tracking nearly impossible. Reporters visited storefronts in Kyiv where you can convert $1,200 in crypto to cash within minutes – no questions, no receipts, no records. The Telegram chats disappear instantly. In Hong Kong alone, these desks handled over $2.5 billion this year. It’s basically a money launderer’s dream come true.
What Happens Next?
So where does this leave us? The industry keeps insisting that security and compliance are “utmost pillars,” but the evidence suggests otherwise. We’re talking about a $28 billion problem that’s not going away. The investigation found that major exchanges worldwide continue receiving massive amounts of criminal funds despite their public commitments to clean up.
The timing couldn’t be worse for crypto’s mainstream ambitions. Major corporations are integrating crypto payments, Wall Street banks are getting involved, and political leaders are pushing adoption. But if you can’t stop North Korean hackers from laundering nearly a billion dollars through your platform, how can anyone trust this technology with the global financial system? The industry has some serious explaining to do – and regulators might finally be forced to act.
