tl;dr
North Korean hackers, Mexican drug cartels, Russian mobsters, and scammers impersonating bosses on Telegram all rely on Chinese black market networks to launder billions in cryptocurrency. Blockchain intelligence firm TRM Labs reveals that Chinese organized crime syndicates, mainly triads, operate u...
Chinese black market banking networks play a critical role in laundering billions of dollars in cryptocurrency for a wide range of criminal groups worldwide.
U.S. policy has largely failed to recognize and address the interconnected role of Chinese money laundering across these diverse criminal activities.
A notable example is North Korea’s record $1.4 billion Ethereum hack, which depended on Chinese money launderers to convert stolen crypto into usable assets.
Informal banks operated by Chinese triads facilitate the exchange of illicit cryptocurrency into fiat currency, enabling global criminal enterprises to operate smoothly.
Disrupting these Chinese crypto laundering networks could severely damage major criminal organizations, including the Sinaloa Cartel.
Targeting Southeast Asian offshore havens with U.S. sanctions may offer a strategic way to dismantle these laundering operations.
Despite official claims of a crackdown, crypto laundering persists in China due to the country’s stringent surveillance and policing infrastructure.
Experts advocate for aggressive U.S. cyber strategies that mirror North Korea’s tactics to more effectively combat crypto-enabled financial crimes.
Current U.S. law enforcement efforts remain fragmented, allowing Chinese crypto laundering networks to evade coordinated regulatory pursuit.
North Korean hackers, Mexican drug cartels, Russian mobsters, and scammers impersonating bosses on Telegram all depend on Chinese black market networks to launder billions in cryptocurrency.
Research from blockchain intelligence firm TRM Labs reveals Chinese organized crime syndicates—mainly triads—operate underground banks that convert illicit crypto into fiat currency.
This service enables criminal enterprises worldwide to function seamlessly despite law enforcement efforts.
TRM Labs’ leadership, with decades of federal experience, argues that U.S. policy overlooks the unified threat these illicit banking networks pose.
Ari Redbord, TRM’s global head of policy, stresses that the U.S. treats fentanyl trafficking, North Korean cybercrime, and crypto scams as separate issues, ignoring their common laundering nexus.
The February 2023 Ethereum hack by North Korea illustrates how Chinese money launderers convert stolen crypto, highlighting the crucial yet hidden role these networks play.
TRM’s senior investigator Nick Carlsen emphasizes that the real threat lies with black market Chinese bankers who have perfected the conversion of stolen crypto into usable assets.
These informal banks allow Chinese nationals to circumvent domestic banking restrictions to access foreign fiat, facilitating large-scale money flows including real estate purchases abroad.
Crippling this global underground system could deliver a devastating blow to organizations like the Sinaloa Cartel, which relies on Chinese laundering for stablecoins like USDT.
TRM suggests imposing U.S. sanctions on offshore safe havens in Southeast Asia, such as Cambodia, to disrupt these laundering networks.
Although China has publicly cracked down on crypto money laundering, experts remain skeptical given the thriving nature of this illicit business despite intense surveillance.
An effective countermeasure may involve aggressive U.S. cyber operations, akin to North Korea’s Lazarus Group tactics, to target and disrupt these financial undergrounds.
Such an offensive cyber strategy would position the U.S. to better neutralize financial capabilities of adversarial states and criminal groups.
Currently, fragmented efforts among U.S. agencies like the FBI, DEA, and Treasury allow these laundering operations to persist unchallenged.
Addressing Chinese crypto laundering as a unified threat is essential to halting its facilitation of global crimes including fentanyl trafficking.
Without coordinated pursuit, these networks continue to operate beneath the radar, posing a significant challenge to international financial security.