Crypto Exchanges Funnel $408M in Illicit Funds: ICIJ Probe

The International Consortium of Investigative Journalists’ (ICIJ) 10-month Coin Laundry investigation has exposed how illicit funds from criminal enterprises were systematically funneled through the world’s largest cryptocurrency exchanges. The cross-border project, conducted with 37 media partners across 35 countries, gathered hundreds of wallet addresses connected to scams, theft, sanctions violations, and other illicit activities, tracing tens of thousands of transactions across public blockchains. The investigation revealed that money launderers working for drug traffickers, Southeast Asian scam networks, and North Korean hacking groups routinely used leading exchanges to move their criminal proceeds.

Perhaps most alarming was the finding that Huione Group, a Cambodian financial institution designated by US authorities as a “primary money laundering concern,” sent approximately $1 million worth of USDT per day to accounts at Binance as recently as July 2025. This contributed to more than $408 million in total transfers from July 2024 to July 2025. These massive flows continued even while Binance operated under two court-appointed monitors as part of its November 2023 plea deal for violating US anti-money laundering laws, which required the company to pay $4.3 billion in penalties.

The investigation uncovered that regulatory enforcement actions and massive fines have failed to stem the flow of illicit funds through cryptocurrency exchanges. The probe found that more than $226 million entered customer accounts at OKX from Huione Group in the five months after OKX pleaded guilty in the US in February 2025 to operating an unlicensed money transmitter and agreed to pay over $504 million in penalties. These transfers persisted despite Huione’s designation in May as a major money laundering concern, highlighting the challenges of effective enforcement in the global cryptocurrency ecosystem.

According to the ICIJ report, regulators globally have imposed at least $5.8 billion in fines and penalties on crypto exchanges, yet oversight remains fragmented and enforcement appears insufficient to deter criminal activity. This regulatory gap becomes particularly concerning when contrasted with US authorities’ estimate of $9.3 billion in crypto-related losses in 2024 alone. The persistence of illicit flows through exchanges operating under court supervision suggests that current monitoring and compliance mechanisms may be inadequate to address sophisticated money laundering operations.

Criminal networks have developed increasingly sophisticated methods to obscure the movement of illicit funds through cryptocurrency infrastructure. Reporters examined how so-called cash desks and courier services operating in global financial hubs including Hong Kong, Toronto, London, and Istanbul allow users to anonymously cash out large sums of cryptocurrency outside regulatory oversight. These services form another critical channel through which illicit proceeds reach or exit exchanges, creating additional layers of anonymity for money launderers.

While blockchain records provide theoretical transparency, the investigation found that criminals routinely use anonymous wallets and tools such as “swappers” to complicate tracing efforts. These techniques create major challenges for exchange compliance teams, with more than a dozen former compliance workers at companies including Binance and OKX telling ICIJ they struggled to keep up with increasingly sophisticated laundering methods. The report documented how scam victims across 12 countries saw their stolen funds move through these same major platforms, demonstrating the global reach of these criminal operations.

The scale of criminal activity using crypto infrastructure was further highlighted by the investigation’s documentation of the alleged pyramid and Ponzi scheme led by Vladimir Okhotnikov, who was accused of stealing at least $340 million from investors between 2020 and 2022 via a manipulated cryptocurrency investment platform. According to the report, Okhotnikov continued to run similar schemes from Dubai, illustrating how criminal actors exploit jurisdictional gaps and the borderless nature of cryptocurrency to perpetuate fraud on a massive scale.