As cryptocurrencies transition from the side lines to the forefront of finance, an unsettling reality is coming to light: billions of dollars in illegal money are going through the world’s largest crypto exchanges. A joint project by the International Consortium of Investigative Journalists (ICIJ), The New York Times and 36 media outlets, revealed at least $28 billion in criminal proceeds entered well-known exchanges in the last two years.
This revelation exposes the substantial disconnect between the rapid expansion of the crypto industry and global systems used to regulate it.
Criminal Money Still Slips Through Major Exchanges
Dark-web drug markets and ransomware groups predominantly use Bitcoin and other digital assets for their transactions. Today, those same digital assets drive global investment, cross-border payments, and start-up creativity. Even though the industry has transitioned to different uses, criminal networks still exist.
The investigation unveiled how hackers, scammers, and extortion organizations—from North Korean cyber units to fraud rings operating in Myanmar and Southeast Asia—were able to move illicit money onto top-tire exchanges. Binance, OKX, and others received deposits associated with scam networks, hacked money, and crypto to cash conversion schemes.
Binance alone took in over $400 million from the Huione Group, a Cambodia-based network that the U.S. Treasury has associated with cybercrime and investment scams. A further $900 million related to North Korea’s Lazarus Group entered Binance deposit accounts after the historic Bybit hack.
OKX, which recently fashioned a settlement with the U.S. government for its financial red flags, received an additional $220 million in five months from Huione-linked wallets.
Each firm claims to be working on improving compliance systems; however, both the available evidence and the data indicate that these suspicious deposits are still being made months later, after they raised red flags.
Scams are Growing Faster than Regulators can Respond
Crypto-investment scams have become one of the biggest risks to the industry. “Pig butchering” operations – where a scammer builds up an emotional trust with the victim before stealing money – are now a worldwide phenomenon.
Victims across the U.S. and Canada whom we interviewed lost life savings. A Minnesota man lost $1.5 million in a sophisticated scam, and more than $500,000 of that amount moved through major exchanges before disappearing.
Exchanges can frequently impose Know-Your-Customer (KYC) restrictions on users. However, scammers are increasingly exploiting “money mules”—people whose identities are obtained or sold—to acquire accounts. One file received from Binance contained a woman from a small village in rural Myanmar who had processed over $2 million in her account.
This creates an ongoing challenge for global police enforcement to track criminals or suspect individuals who can transfer funds just by pushing a few buttons.
A Different Kind of Itinerary: Crypto-to-Cash Outlets
In conjunction with these online scams, physical crypto-to-cash storefronts are blossoming all over Asia, Europe and the Middle East. The cash conversion businesses are small shops that allow visitors to walk in, convert crypto and leave with cash—often with no ID.
Reporters observed cash conversion establishments in Kyiv, Hong Kong and Dubai transferring thousands of dollars in mere minutes. According to Crystal Intelligence, a blockchain intelligence firm, cash conversion establishments in Hong Kong alone performed over $2.5 billion in transactions last year.
Many of these transactions happened through the major exchanges. Binance, OKX, and Bybit received over $531 million worth of these transaction processing services in 2024.
Due to the anonymity of these services, they are seen as a natural choice when money laundering, said multiple forensic experts.
India’s Emerging but Unregulated Retail Cryptocurrency Market
India is home to one of the largest user bases for cryptocurrency estimated at 119 million users, though the market is still unregulated. While the government does taxable digital assets, they do not exist as a recognized medium of exchange. The Reserve Bank of India (RBI) has consistently expressed concerns that the widespread adoption of cryptocurrency in India could threaten financial stability and facilitate illicit finance.
That said, India’s cryptocurrency market stood at $2.6 billion in 2024 and will expand to $15 billion by 2035, largely on the backs of Gen Z investors.
Security experts suggest that without a specific crypto law, users in India are vulnerable to fraud, hacks, and financial manipulation.
The Bottom Line: A Growing Industry with Shaky Guardrails
The global cryptocurrency market is currently valued at over $4 trillion. However, the guardrails term intended to keep the market safe, strong KYC (Know Your Customer) rules, AML (Anti-Money Laundering) systems, and law enforcement policing remain inconsistent from one jurisdiction to another.
As long as exchanges experience large volumes of suspicious transactions from criminals taking advantage of the gaps, the situation will remain the same. The takeaway for consumers: cryptocurrency might be innovative, but there is no way around the fact that it is not without risk.
Finding trusted transaction platforms, avoiding fast-money schemes, and improving digital security strategies will protect users more in a changing and unpredictable cryptocurrency market.
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