How criminals use cryptocurrencies: mafia and drug cartels
Digital assets have changed the lives of people and criminal circles. How do criminals use cryptocurrencies, and what do law enforcement officers do?
In the 21st century, organized crime groups have reached a new level: the Internet has given them the opportunity to do business with the whole world, and new technologies have taught them to hide their identity and cash flows. Instead of cash, dealers use hardware wallets with cryptocurrency.
How criminals use cryptocurrencies in Italy
Digital coins have been criticized for their connection to the underworld since 2011. Then they were used to buy banned substances at the Silk Road site. However, really dangerous organizations began to actively use cryptocurrencies only in 2020. The DIA (Anti-Mafia Authority in Italy) reported that the importance of cryptocurrencies for organized crime has reached a peak.
The DIA report says that digital assets pay for synthetic drugs distributed by the mafia in Italy and abroad. As a result, during the lockdown, sales increased significantly, which is why bitcoin and altcoins firmly entered the syndicate’s “bookkeeping”.
A DIA spokesman said: “The most powerful criminal organization in the country, Ndrangheta, is increasingly using cryptocurrency and the dark web. Soon the lion’s share of their “business” will be conducted in this way.
Also reported: the Italian mafia is interested in buying weapons and military uniforms from the Americans and paramilitary countries (Afghanistan, Iraq) with payment for transactions through BTC, BCH, LTC or USDT.
Mexican cartels: how criminals use cryptocurrencies obtained from the sale of drugs
Digital coins are convenient not only for paying for a single dose. Jalisco and Sinaloa New Generation Cartels are actively mistaking crypto for tons of cocaine, heroin and synthetic drugs.
Santiago Nieto, an intelligence spokesman for the Mexican Ministry of Finance, described how cartels launder cash using cryptocurrencies. For example, they invest income in bank deposits. After that, the funds are directed to the purchase of a small amount of BTC and other altcoins. There are many thousands of such accounts. If the deposit amount is less than 56,000 pesos, then the user will be able to send a transfer from it abroad without hindrance.
At the next stage, cartel members receive a transfer in the United States or European countries. This allows them to continue living a luxurious lifestyle. On Instagram there is a hashtag for drug dealers #NarcosStyle. Under it, they publish pictures of people in branded clothes, on very expensive sports cars, with exotic animals or with weapons encrusted with precious metals and diamonds.
According to the data in 2021, only the Sinaloa cartel earned $ 10 billion, although its founder was sentenced to life in prison 2 years ago.
Own exchange at the Jalisco New Generation Cartel
The syndicate has carefully studied the principles of working with cryptocurrencies. So, he created a money laundering exchange to transfer them abroad.
This conclusion was made by the Mexican authorities when they analyzed the activities of the Volabit cryptocurrency platform. It turned out that members of the Jalisco cartel own 98% of the transactions of the exchange. The authorities have included the resource on the banned list, but Volabit continues its illegal activities. In addition, after a thorough check, 12 more illegal exchanges were identified. They were fined $15,000 each and the investigation was dropped.
Colombian Cali cartel laundered 6 million euros with cryptocurrency
The Cali syndicate has existed since the 1980s. It was destroyed in 1997. However, we are currently witnessing his reincarnation. The organization operates in Mexico, the United States and in Europe.
In 2020, for example, a dealer in Spain was arrested. Later it turned out that he was the representative of the Cali cartel in Europe and laundered 6 million euros for him with the help of crypto assets. It was not possible to trace the fate of that money. Presumably, they were cashed in America.
The perpetrator was arrested at his villa in Marbella. Subsequently, dozens of luxury items, several premium cars, expensive watches and 85,000 euros in cash were found on the estate. In addition, the police seized over 20 pieces of computer equipment and smartphones.
The most popular cryptocurrency among criminals
Despite the fact that bitcoin is the most popular coin, only organizations with large turnovers can hide cash flows with its help. This is required to create thousands of transactions and hide traces in the blockchain behind them. For illegal activities, this scheme is chosen only by the Italian mafia, Mexican and Colombian cartels, as well as Japanese organized crime groups.
Organizations with more modest turnovers choose lesser-known coins:
- Bitcoin Cash
- Monero is the leader in terms of the number of transactions.
They pay for illegal substances, weapons and illegal services without financial traces. However, there are ways to track such transactions as well. Recall the legendary Silk Road, the creator of which received a life sentence. Cryptocurrency and anonymous transfers via the darknet were also used there.
How the DIA, DEA, and Mexican Authorities Fight Cartels and Syndicates
In Italy, the United States and Mexico, special units are working to detect suspicious transactions. Often they succeed, and then criminal organizations lose billions of dollars annually. As a result, their structure weakens, and tons of prohibited substances do not enter the streets of Europe and America.
However, the overall struggle is far from over. For example, the Mexican cartels are so successful that their “army” is stronger and more loyal than the state. The fighters of crime syndicates are ready to die for their leaders, which cannot be said about an ordinary soldier or a policeman with a minimum salary.
In 2019, the leader of the Mexican Sinaloa cartel was caught. It turned out to be the son of the famous Baron El Chapo. After the arrest of the leader, his people staged a massacre in the city. As a result, the authorities had to release the perpetrator in order to stop the violence.
Even knowing how criminals use cryptocurrencies and for what purposes, their importance for the future of the financial system is difficult to underestimate. Therefore , governments need to learn how to monitor suspicious transactions related to the sale of illegal goods and services. As a result, this will help develop an effective method of rebuffing advanced organized crime groups