A drug cartel with operations in several countries used Binance to transfer millions in illegal proceeds, according to a U.S. Drug Enforcement Action (DEA) investigation.
Forbes noted that the investigating agency has alleged that the gang’s profits funneled through Binance could be up to $40 million. This has put the largest exchange by volume in the eye of a significant money-laundering case.
Cartel Laundered Estimated $15M-$40M
The news outlet, which received a $200 million strategic investment from Binance this year, claimed the exchange is closely working with the agency to track the crime. The probe kickstarted back in 2020 as per the search warrant obtained by the paper. Official sources to the agency reportedly found links in the case when a user attempted to make a simple cash-for-crypto exchange.
According to the investigation, the trader misrepresented the origin of the funds as coming from family eateries and cattle farms. The person was reportedly arrested in 2021. Soon after, the transaction trail with the undercover agent revealed the account used for laundering funds.
According to the search warrant, the account mentioned above made 146 cryptocurrency purchases for more than $42 million in 2021 and sold more than $38 million across 117 sell orders. The DEA estimated that drug sales generated at least $16 million of these revenues.
DEA informants are present online on various trading platforms like LocalBitcoins. The Mexican gang is said to be operating in Europe and Australia as well, apart from the U.S. and Mexico. And the cartel is majorly dealing in meth and cocaine, per the report.
Neverending Regulatory Trouble for Binance
Binance CEO Changpeng Zhao tweeted that blockchains’ transparency works against criminals and might not be a good tool for illicit activity. Last month, a man in South Korea was prosecuted for sourcing banned narcotics by paying in crypto.
In May, Binance stated in its blog post that the exchange aided U.S. Drug Enforcement Agency in nabbing over 100 accounts linked to illicit drug dealers.
However, Binance has been dealing with regulatory issues for a while now. Reuters recently claimed that Binance was concealing its trades from the public by citing the exchange’s corporate documents. It claimed that in 2022, transactions worth more than $22 trillion appeared to be the exchange’s “black box .”
Previously, the news outlet also claimed that the US Justice Department was probing Binance over money laundering violations.
While that happens, Binance announced Tuesday that it had joined the Chamber of Digital Commerce to lobby support through the digital asset association.
That said, regulators are tightening anti-money laundering/combating the financing of terrorism controls.
According to Chainalysis’ 2022 report, criminal activity involving cryptocurrencies peaked in 2021, with criminal addresses collecting $14 billion.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.