Crypto - Coda Story

Crypto’s corrupt American dream

Teona Tsintsadze — Wed, 20 May 2026 11:50:00 +0000

The United States is inching closer to passing a gigantic piece of legislation to put cryptocurrencies on a secure footing, with the bill emerging unscathed from the Senate’s banking committee. Opinions differ as to what this means: crypto people are thrilled, while anyone who knows about money laundering is terrified. Passage of the so-called CLARITY bill has been a key goal of crypto enthusiasts since Donald Trump came to power, since it would give them the legal certainty to engage in “financial innovation” without worrying about a return to the Biden-era policy of trying to regulate them as if they were normal people.

Committee chairman Tim Scott is delighted: “For me, this is personal. My mother raised my brother and me with faith, grit, and determination, and she taught me that the American Dream should be within reach for every family, including single mothers working hard to build a better life for their children.”

I quote Scott partly because it’s such a weird justification for passing crypto regulation (or perhaps he just says that sort of thing about literally everything he ever does?), but mainly because it’s pretty clear that the bill as it stands will be a disaster for the kind of vulnerable people he claims to be fighting for.

In a sign of experts’ concerns, Transparency International’s U.S. office put out a statement quoting nearly all the most respected voices on money laundering in America arguing that the bill needs better safeguards against dirty money. “At a time when we know that hostile actors like (Iran’s Revolutionary Guards) are looking to circumvent U.S. sanctions to rearm and threaten Americans and U.S. interests around the world, it is inconceivable to me that we would open new, effective channels for sanctions evasion,” said Richard Nephew, former U.S. Coordinator on Global Anti-Corruption and Deputy Special Envoy for Iran.

“Terrorists, violent drug traffickers, and organized criminals who prey upon the elderly and unlearned in increasingly sophisticated financial and AI generated schemes are, quite literally, getting away with murder, funded by untraceable cryptocurrency transactions hidden behind an anonymous block chain,” said former FBI agent Karen Greenaway.

There is an awful lot of money in crypto, and Tether alone now has three people among the richest 100 in the world. Tether’s largest single shareholder Giancarlo Devasini’s wealth has grown from $9.2 billion in 2024 to $89.3 billion now, while chief executive Paolo Ardoino and former CEO Jean-Louis van der Velde have done pretty well too. Though none of them have done quite as well as Changpeng “Binance” Zhao, crypto’s only centibillionaire (so far).

In the UK, there’s a lot of concern about the millions of pounds going from crypto investors to Reform’s Nigel Farage, who has become a crypto champion, no doubt coincidentally. But, wow, look at what’s happening in Alabama for a sign of what the future looks like if crypto people really get their hands on the purse strings and try to buy their way into the Senate.

That much money doesn’t just help supporters win, it also terrifies opponents: standing up to the crypto lobby guarantees you’ll be swamped in hostile advertising. How do you want to be paid, as Pablo Escobar used to say, in silver or lead?

But why should the rest of the world care that this is happening? I’m sure I’m not the only foreigner who’s been staring in bewilderment at the growth of U.S. prediction markets, and how efficiently they allow insiders to monetise their privileged access to inside information. A lot of those markets are barred in other countries, but the U.S. soldier who was arrested for betting on the Maduro capture was trading on polymarket, a crypto-denominated market which is blocked in the United States too, despite Donald Trump Jr. being an investor.

Such restrictions can be easily bypassed by using a Virtual Private Network, so U.S. regulators are using artificial intelligence to track down insider trading on polymarket. After that soldier’s arrest, I suspect Americans will be much more careful about what they do.

Prediction markets claim they don’t want insiders trading on privileged information. But if the markets are to function in a way that supports their founders’ justification for them, as a price signal for future events, they rely on people with knowledge to be using them to make bets and thus to move prices in a useful direction. So clearly the temptation will always be there for anyone with inside information to use it to make some easy money.

And does anyone think U.S. regulators will care about Indians, Brits, South Africans Ukrainians, or other foreigners using crypto to trade on information from their own countries? They after all have a track record of treating foreigners and U.S. citizens differently. That’s why it was Francesca Albanese, with her American husband and daughter, who managed to have sanctions cancelled for daring to investigate Israel’s behaviour in Gaza, whereas non-U.S. connected people have failed to do so.

The new U.S. crypto bill coupled with U.S.-based crypto-denominated prediction markets points towards the United States becoming a gigantic offshore enabler of corruption for the rest of the world; a digital version of what Switzerland was in the analogue years, with everyone else reduced to begging its regulators for assistance.

“Crypto prediction markets are accessible to anyone with an internet connection and a wallet, pooling liquidity from a global user base rather than a regional one,” says Chainalysis. I think they mean that to be a good thing, because the blockchain is transparent and malefactors can be spotted easily yada yada, but it sounds beyond dystopian to me. I’m genuinely a bit terrified of what this will mean for corruption in the next few years, and I haven’t heard of any politicians who are alert to it yet.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Legalize Cocaine to save democracy

Irina Matchavariani — Wed, 13 May 2026 11:55:00 +0000

Nigel Farage, the leader of the UK’s right-wing Reform UK party, has taken millions of pounds from crypto people, including one convicted of financial crimes in the United States. There are, despite Farage’s insistence to the contrary, questions around whether he followed the rules. Nonetheless, his party has swept local elections. There’s a lesson here for progressive parties everywhere, including in the United States where senators are seeking documents relating to financial ties between the commerce secretary and Tether. What if you get your ‘gotcha’ moment, turn around to the voters with a broad smile… and they vote for your opponents anyway?

Believers in democracy need to start advocating for more transparency, more enforcement and more restrictions on murky finance if they want to stop unaccountable money from buying influence in their countries. It is not enough to rely on journalists and activists to produce the occasional investigation, and expect voters to do the rest: we need properly-resourced agencies that can keep dirty money out of our systems if we want them to remain clean. If history tells us anything, it’s that criminals get elected all too often.

This is urgent. Tether made more than $1 billion in profits this year, in the first quarter, and is thinking hard about the midterms and how candidates might be encouraged to fight for crypto. And that’s just one company. Progressives who believe in fairer finance, a state’s right to regulate its own economy and the power to oversee who’s buying whom, don’t have that kind of money to spend to influence elections, so they need to start making the argument for campaign finance restrictions much more forcefully.

But there’s another point here too. I am working on an article about money laundering at the moment, and was chatting to two UK detectives last week. They led a successful operation in their city (I’ll post the article when it’s done) and I asked if they thought it had made a lasting difference. “With all crime, you take one out and there is another,” one of the detectives told me. “I'd like to think it has made a dent but there will always be more.”

In the case they worked on, gangs were bringing cash generated via the cocaine trade to be laundered into crypto (no prizes for guessing which cryptocurrency they preferred). The detectives identified £53 million in turnover over two years. It’s great that they jailed the ringleaders, but you can see why they’re not getting too carried away. That total is about a quarter of a percent of the UK cocaine market’s turnover, so the gangs really won’t have noticed the loss. And, for the police, it was five years’ work.

To a fairly large extent, since the first U.S. operation in Miami in 1980, when we’ve spoken about fighting dirty money, we have really been talking about stopping cocaine gangs by taking away their ability to make a profit. And, despite occasional successes like the one I’m writing about, this approach has overall been a catastrophic failure. Cocaine is cheaper, more abundant, and more widespread than ever before.

This is important for many reasons, obviously because entrusting the supply of a dangerous substance to criminals is bad, but also because the existence of a vast underground financial system to move the cocaine trade’s profits creates a mechanism through which Russian spies, terrorists and others can hide their cash too. For me though, the real problem is that we have an urgent threat to democracy posed by hidden unaccountable money. Instead of tackling that problem though, our police officers are fighting an endless war against drugs that was lost decades ago.

My modest proposal therefore is to legalise cocaine. It’s available everywhere already, so there’s no downside. We should tax it, regulate it, make sure kids can’t buy it and, as a useful side effect, take all the liquidity out of the underground economy. Our police officers could then stop running to go backwards, and instead fight a battle they might actually win, which is to stop fascists and kleptocrats from buying our democracies.

Use oligarchs to undermine Putin

Here’s a good article from The Economist by “a former senior official in the Russian Government,” arguing that Vladimir Putin is losing his grip. Now, I’m always a little cautious about articles that tell me what I want to hear, as well as the veracity of information and analysis provided by Russian officials, former or current, but it does make some very interesting points.

Of particular interest to me is the idea that Russia’s elite is annoyed with Putin because its members are worried about having their assets stolen, with $60 billion worth of property nationalised or seized by corrupt officials in the last three years.

“Previously their property rights were outsourced to the West. They used London courts, offshore structures and international arbitration to resolve conflicts or seek protection. Now conflicts must be resolved domestically, without functioning institutions. Demand for rules grows more urgent as redistribution of assets gathers pace,” the article states.

One of the reasons why democracy failed in Russia is because the oligarchs were able to keep their wealth offshore, and thus to essentially colonise their own country, secure in the knowledge they were themselves immune from the unfairness. It would be a pleasing irony if the horrific war in Ukraine ended up undermining not just Putin, but Putinism as a whole.

There is a huge opportunity here for Western governments to capitalise on the dissent, and to start quietly offering sanctions relief to Russians willing to break with Putin, and who’re prepared to surrender a decent chunk of their wealth to help Ukraine in return for being able to keep the rest. There aren’t enough police officers to actually bring the cases needed to investigate, prosecute and confiscate the oligarchs’ wealth anyway (see item above), so we may as well start negotiating and see what they’re willing to do to get it back. In short, this is a big week for me making unfashionable policy proposals.

AI-generated launderers

There’s debate in the United States about getting rid of the Corporate Transparency Act, with Jeff Bezos’ Washington Post supporting repeal, even though the law has never actually been implemented. Opaque shell companies are a weird outgrowth of capitalism that corporations’ original inventors — who wanted to create insurance for entrepreneurs, not getaway vehicles for crooks — never intended to happen, so it’s very odd that they’re now being presented as some kind of human right.

If you want a reason why the appallingly lax American system should be cleaned up, here’s a post on X about someone who tasked two AI agents with making money, and came back to find out they’d registered a Wyoming LLC all by themselves. This suggests the opening of a whole new frontier of automated money laundering, and the consequences are frankly pretty terrifying. The Corporate Transparency Act should be strengthened, not abolished.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Why Trump-backer Justin Sun is suing the Trumps’ firm

Oliver Bullough — Wed, 29 Apr 2026 11:55:00 +0000

Donald Trump and the crypto world have done well out of each other. The Trump family has made profits of several billion dollars, and ‘cryptopreneurs’ have found the United States a newly supportive environment for their products. But the crypto world is not a single entity, and there are potential differences of opinion and approach between the parts that specialise in fraud, money laundering, and speculation (as well as the small number of societally beneficial uses), and a court case between billionaire Justin Sun and the Trump family’s World Liberty Financial threatens to blow those divides wide open.

Sun is a colourful gentleman and a firm favourite of this newsletter, thanks to his efforts to essentially buy the Pitcairn Islands, his voyage into kind-of space, his consumption of a $6.2 million banana, his stewardship of the Tron blockchain, his premiership of Liberland, and his frankly adorable continued usage of “H.E.” (his excellency) as a title despite losing his Grenadian ambassadorship three years ago after being accused of fraud by the Securities and Exchange Commission.

He also had a key role in transforming Trump from cryptosceptic into cryptoenthusiast after investing millions of dollars in World Liberty Financial in late 2024, which helped to persuade the president — then running for re-election — that there was money to be made on the blockchain.

Considering the improbability of the Trump family building an actually successful crypto company, and the strong likelihood World Liberty Financial would find a way to keep investors’ money as has happened with Trump ventures in the past, quite a lot of people assumed Sun’s money was in reality more of a gift than an investment. But it appears these doubters were wrong, at any rate that’s what it says in the suit that Sun has filed in California alleging that World Liberty Financial has abused his rights.

“Mr. Sun invested $45 million to purchase $WLFI tokens from World Liberty not only because of the project’s claims that it would promote adoption of decentralized finance… but also because of the Trump family’s association with the project,” his claim states. “But as Mr. Sun unfortunately has learned, World Liberty’s operators, including Chase Herro, see the project as a golden opportunity to leverage the Trump brand to profit through fraud.”

Sun has been careful to make clear this is not an attack on the president (“Unfortunately, certain individuals on the World Liberty project team have been operating the project in a manner that goes against President Trump’s values,” he posted on X), who is, he says, being betrayed by underlings — as autocrats have always been throughout history — but he is certainly airing a lot of dirty laundry, which is likely to upset influential people.

Perhaps the most significant allegations, which World Liberty Financial denies, is that the Trump family’s company is on the verge of collapse, having paid most of its money to its owners, and that it tried to extort money from Sun to keep it in business. This is not just significant for its investors but also for America’s diplomatic ties, since Abu Dhabi has invested $2 billion via World Liberty Financial’s USD1 stablecoin, and the United States can ill-afford to further irritate its allies in the Gulf right now.

The timing of the lawsuit is interesting. It was notable that, shortly after Trump returned to the White House, the Securities and Exchange Commission paused its investigation into Sun. In March, that investigation was finally wrapped up, with Sun paying $10 million but not admitting wrong-doing, so he is perhaps no longer concerned about facing legal action himself.

Sun was also a major investor in Trump’s memecoin, but is not the only person who seems to have soured on that particularly unlovely project. One of the perks of being an investor in the token is the right to have dinner with Trump, but the value of that ticket dropped this year to just $539,000 from $3.28 million in 2025, with the Financial Times quoting an expert as calling the friendship between Trump and the crypto-world “a shotgun marriage,” which seems fair.

The Trump family has, however, made $320 million in fees from the memecoin alone, so I suspect they’re not that bothered.

A tale of two scammers

There was, hard though it is to imagine, a time when Trump was just a strangely-tinted TV personality with strong views on where Barack Obama was born. And back then, in those prelapsarian days, 2014’s billion-dollar Moldovan bank fraud was a big deal. It’s great to see that mega-oligarch Vlad Plahotniuc has been jailed for 19 years for his involvement in a crime that ruined his homeland.

Moldova has struggled through the resulting period of economic, financial, diplomatic and political turmoil, and it was great to see that Viktor Orbán’s defeat in Hungary has meant it can make progress on its movement towards membership of the European Union.

The other mastermind of the bank fraud is pro-Kremlin politician Ilan Shor who was convicted and sentenced in absentia. He remains, of course, at liberty. Though his A7A5 sanctions-evading cryptocurrency has still not recovered the trading volume it had before the recent hack of the Grinex trading platform where people bought and sold it. Grinex blamed the hack on Western intelligence agencies, but Chainalysis has an interesting alternative explanation, based on the fact that A7A5 is gradually being squeezed by Western sanctions (including the latest ones from the European Union).

“Faced with mounting international pressure and a shrinking operational footprint, actors associated with Grinex could be using the guise of an alleged hack to quietly siphon liquidity and execute an exit scam,” Chainalysis suggested. I’m not saying that is what happened and to be honest, I think it’s more likely that this was the handiwork of Ukrainian hackers or standard financial criminals. I mention it, however, because Shor does have a previous record when it comes to setting up a money laundering scheme and then defrauding everyone who was foolish enough to trust him with their money.

The billion-dollar bank fraud was a clever way to profit out of the ‘Moldovan Laundromat,’ which had been allowing Russians to smuggle money out of their homeland before Shor and his co-conspirators destroyed the Moldovan banking system and stole everyone’s cash. It would be remarkable if he had basically done the same thing for a second time with his stablecoin. Crypto people call it a rug pull.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Why Europe must disable Russia’s crypto ecosystem

Oliver Bullough — Wed, 22 Apr 2026 11:55:32 +0000

Someone recently asked me what mark out of 10 I’d give for the efforts of governments to tackle financial crime. It got me thinking about that one bright spot of recent times — the West’s response to Russia’s full-scale invasion of Ukraine four years ago — and how it is now looking. Back in 2022, a lot of us were pleasantly surprised by the speed and ambition with which Western governments sanctioned the Russian government, state-owned companies and wealthy individuals. While Western pressure did not prevent the war, the asset freezes did impose a real cost on those conducting it. Four years on, however, those sanctions are beginning to look a bit shopsoiled. If they began at 7/10, they’re now scoring a lot lower.

There are reasons for this: Donald Trump does not appear particularly interested in Ukraine; the now former Hungarian prime minister Viktor Orbán has been snarling things up; and so on, as laid out in this analysis from Tom Keatinge. To make things worse, Trump’s latest adventure in Iran has pushed the oil prices sharply higher, earning more money for Russia while also giving Trump cover to lift sanctions, a temporary measure he has recently extended.

Keatinge argues that European countries need to be far more focussed on going after Russia’s payment mechanisms, particularly digital. “The extent to which crypto activity supports Russia’s war effort is clear,” he writes, “yet repeated initiatives to elevate the importance of opening a concerted line of effort on this issue are ignored. This must change.”

I agree, though it won’t be easy, considering the diffuse crypto ecosystem, and the increasing sophistication of Russian involvement in it. As long as Telegram is willing to host markets, the markets will continue to function to some extent whatever Western countries do (see the story of Xinbi, a Chinese-language hub for illicit crypto.) However, it does look like someone somewhere has lost patience with the ease with which Russia is funding itself.

“The sanctioned Russia-linked cryptoasset exchange Grinex announced an immediate suspension of its operations, citing a ‘large-scale cyberattack,’” reports Elliptic. According to the statement, which Kyrgyzstan-registered Grinex posted on Telegram, it lost around $13 million worth of USDT in the hack, blaming the theft on Western intelligence agencies.

“Today the attempts to destabilise our fatherland’s financial sector hit a new level, with the direct theft of the assets of Russian citizens and companies with the involvement of complex cyberattacks,” the statement said. Grinex is the successor to Garantex, which was shut down just over a year ago after years of effort by Western law enforcement. I would be surprised if Western countries had decided to take direct action against Grinex, as the exchange claims they did. Westerners tend to be a bit too legalistic for this kind of smash-and-grab, and I would expect any operation to more closely resemble what worked a year ago, conducted with Tether’s cooperation.

Instead, I suspect this attack is the work of hacktivists, perhaps working for or with the Ukrainians. Whatever the answer, it is embarrassing for the Russians, shows their crypto-security is not impregnable, and has made a noticeable dent in trading volumes of the A7A5 ruble-denominated stablecoin, which has become a key sanctions evasion tool. Three birds with one stone.

The important point is that sanctions were never supposed to be permanent: they are a foreign policy tool, not a law enforcement one. Hundreds of billions of Russian-owned dollars are languishing in various frozen bank accounts, and Western countries need to start thinking about what to do with them. They can confiscate them, investigate them or — if they’re feeling brave — use their potential return as leverage to persuade wealthy Russians to break with the Kremlin. What they shouldn’t do is leave them as they are to gather dust.

Hopefully, now that Orbán is out of the way, European countries will be able to take firmer collective action but they also need to be imaginative, and to start behaving as if they actually want Ukraine to win, rather than just not lose.

A defeat for transparency

Of course, the United States will have a lot to say about that too, and what it ends up saying about how to tackle the Russian crypto operations will depend on what happens in the midterm elections this year. So, it strikes me as a big deal that crypto firms are once more pouring tens of millions of dollars into campaign vehicles in their quest for, what they euphemistically refer to as, “regulatory clarity.” Among them, of course, is Tether.

If you’re wondering quite how it’s possible to spend that much money on elections, I draw your attention once more to the great Integrity Index, with its records for who’s been spending what. It boggles my mind that, for example, the three Democratic rivals to the Republicans’ Susan Collins for the Maine Senate seat have raised more than $17 million just for the primary. Collins herself has raised over $10.5 million. There really shouldn’t be that much money in politics.

Besides, when it comes to value for money, investing in court cases beats investing in politics every day of the week. I don’t know how much the (ironically) anonymous plaintiffs in the 2022 case against corporate transparency in Luxembourg paid their lawyers, but its effects just seem to keep compounding to the benefit of those who want to hide their wealth from society.

The European Union’s retreat from revealing the ownership of shell companies has given cover for Britain’s tax havens as they resisted efforts from London to force them to open up their own corporate registries. It looks like those efforts may have finally failed. “We are committed to full transparency, but I don’t think there will be any turning back,” said the British Virgin Islands’ Junior Minister for Financial Services Lorna Smith in comments confirming that the islands are in fact very much not committed to full transparency.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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The performative war on money laundering

Oliver Bullough — Wed, 08 Apr 2026 12:11:58 +0000

Dutch friends like to tell me that their nation’s primary characteristic is bluntness, and the Netherlands’ Court of Audit has done nothing to challenge the stereotype with its bracing assessment of the country’s and, by extension, the world’s failure in fighting money laundering. Published last month, after an extensive analysis of the country’s efforts to stop dirty money, the Court’s report concludes that the system is expensive, discriminatory, and — possibly — completely ineffective. No one has really checked on that last point, so they can’t be sure, which if anything makes it all worse.

The Netherlands hosts the largest port in Europe, and is therefore home to a vast smuggling industry — Dutch politicians not infrequently warn that it’s becoming a narco-state — which requires an equally vast money laundering industry to service its profits. The Court of Audit set out to check the government’s response to this challenge, concluding that it cost banks €1.6 billion a year. It’s a price tag that has increased by almost 17% between 2021 and 2024, during which time the number of reports the banks’ 13,000 compliance officers made more than doubled.

“We think it is important that these employees make a meaningful societal contribution to preventing and combatting money laundering. There is no evidence that shows that they do,” the report witheringly observes.

The court sent surveys out to “politically-exposed people” (PEP is a jargon term meaning anyone in a position of power, or a close relative or associate) asking about their experiences. One person’s 83-year-old mother was asked to explain the source of an inheritance she received after the PEP applied for a loan. It is an eye-opening section, revealing how process is prioritised over any kind of judgement about where the risk of money laundering genuinely lies, but the real shock is in the section about different religious groups, which shows how the transactions of immigrant-focussed churches and mosques are systematically checked more thoroughly than local Protestant or Catholic congregations.

“A bank told a mosque that it was not possible to collect so much money after a prayer meeting,” the report notes. “The mosque’s trustees said the bank could come and see for itself but the bank declined. Feeling powerless and unable to deposit the money with the bank, the trustees hid it in the mosque.”

Imagine if we had an ongoing health crisis. And imagine that the government had created an expensive, intrusive system to tackle it, which was generating an endlessly increasing amount of paperwork, employing thousands of people and actively discriminating against religious and ethnic minorities. Surely, someone would at least put in the hours to check if the system worked, whether it was making people healthier, and assess therefore whether all these bad side effects were justified?

With anti-money laundering policy, that is simply not happening. It’s based on faith rather than facts: we just need to do more of the same thing, and eventually we’ll get the results we want; if we don’t, we need to do the same thing even more. Interestingly, Texan judge Jeremy Kernodle — fresh from gutting the Corporate Transparency Act — has returned to the fight against anti-money laundering regulation. He has killed Geographic Targeting Orders, which were supposed to collect information around real estate transactions. “FinCEN’s explanations are vague, conclusory, and unpersuasive,” the court ruled. “The fact that some bad actors have conducted non-financed real estate transactions does not make such transactions categorically ‘suspicious.’”

I’m not saying I agree with Mr. Kernodle, because I don’t, but I don’t think pushback on anti-money laundering orthodoxy is necessarily a bad thing, since it obliges us to think more deeply about what actually works, rather than just going along with ineffective old policies. I hope people outside the Netherlands read the Court of Audit’s report and start wondering whether this approach isn’t long past time for a complete overhaul.

How do you solve a problem like crypto?

It’s quite unusual for there to be a divide in the UK’s anti-corruption community, which tends to agree on technocratic solutions to the problems around illicit finance, but one has emerged around the role of cryptocurrencies in political donations. Spotlight on Corruption doesn’t think the government’s moratorium on crypto donations goes far enough. There needs to be a ban, they argue, in primary legislation with additional safeguards. I agree.

The folks at RUSI, on the other hand, think a moratorium on crypto donations is a better idea since it would prime the country to take regulating cryptocurrencies more seriously, and prepare the way for them to be widespread. Take a look, judge for yourself, and let me know what you think. The difference may reflect deeper and unresolvable political differences in how countries should respond to globalisation, but it’s an interesting one to think about.

One thing I think we all agree on is the need for an urgent overhaul of all rules around electoral finance, while there’s still an honest system to approve them.

On that note, interesting news from Cambodia, which has extradited Li Xiong to China. Xiong, who is accused by governments worldwide of playing a key role in the now-collapsed Huione group, which was laundering money for crime syndicates on an industrial scale, with particular expertise in cryptocurrencies. Of course, the criminals have not stood still and have new markets up and running, but it is striking how quickly the extradition went ahead.

In contrast, the legal proceedings around the mammoth tax fraud exposed two decades ago by Sergei Magnitsky grind tortuously on, with the culprits still safe in Russia. They certainly enjoyed themselves in Europe for a while, however, as a court case in Paris shows. “The spending spree included: €668,517, ($771,703) at a Parisian art and antique gallery; €696,015 ($803,445) across two high-end French women’s fashion brands; €96,814 ($111,757) at a luxury jewellery store in Courchevel, an exclusive ski resort in the French Alps; and €127,182 ($146,813) for a Courchevel tour package.”

There are few things that reveal the moral bankruptcy of the regime in the Kremlin more than this case. It’s not enough that corrupt officials could kill a good man who exposed their $230 million theft from the Russian people, but the Russian state then shielded them while they splashed the loot on European luxury holidays, and continues to do so to this day.

Nothing on the same scale is happening in the United States of course, but still this analysis of how enforcement of the Foreign Corrupt Practices Act is being politicised is a bit grim: “The transformation of U.S. antibribery tools into economic weapons also threatens to undo the global system the United States helped establish to punish business corruption.”

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Terrorism’s crypto financiers & Trump’s clemency habit

Oliver Bullough — Wed, 03 Dec 2025 14:00:00 +0000

It is bad for a financial institution to be convicted of helping to launder money, but it is catastrophic to be convicted of helping to finance terrorism. This is why the civil case recently launched in North Dakota against Binance, in which the crypto giant is accused of helping “Hamas, Hezbollah, Palestinian Islamic Jihad, and Iran’s IRGC-QF, to move and conceal over one billion dollars through its global platform”, is so significant.

The suit has been brought on behalf of 306 American victims of the October 7, 2023 Hamas attacks in Israel, and alleges that Binance accounts transferred $300 million to Hamas and other terrorist organisations, and received $700 million from them, figures that dwarf the sums detailed in the criminal prosecution of Binance that led to its $4.3 billion fine two years ago.

“This was not a compliance lapse, it was a business model,” said Jonathan Missner, managing partner of Stein Mitchell Beato & Missner LLP, the law firm behind the case. “Our investigation shows that Binance built systems designed to evade oversight, using its off-chain network and weak controls to move enormous sums for sanctioned groups. This platform became a conduit for financing murder, kidnappings, and rocket attacks. The families deserve justice—and the public deserves transparency.”

In a previous case brought under the same legislation, Jordan’s Arab Bank was sued and – despite procedural wrangling that went on for years -- ended up settling with the victims for an undisclosed but significant sum of money.

Anything that forces Binance to start taking its responsibilities to victims of crime as seriously as it takes its willingness to accept money from perpetrators of crime is a good thing. And if you want to see how widespread those crimes can be, read this excellent investigation from the ICIJ which finds crypto platforms to be “awash with dirty money.” But there are always particular challenges around terrorism funding, which can have perverse outcomes.

In contrast to drug cartels, for instance, terrorists move relatively small amounts of money, which means financial institutions have to monitor a far larger array of transactions if they want to protect themselves from a lawsuit. Because terrorists use banks in the same way as anyone else does, what this tends to mean is that very large numbers of ordinary people lose their accounts just so compliance departments can be sure to sweep out the terrorists.

The result is the under-discussed phenomenon of debanking, which overwhelmingly affects Muslims and charities targeted towards Muslim beneficiaries.

“Humanitarian charities are facing banking barriers because banks are adverse to giving large transactions to countries they deem a risk, like Syria,” said Abdulsami Arjumand, a senior executive at the U.K.’s Muslim Charities' Forum. “Banks determined to avoid any heavy fines from the US treasury or the FCA act with very strict risk appetite… There is a balance to strike between securing aid and fighting financial crime. At the moment, we are far from that equilibrium.”

People excluded from traditional finance by this kind of inherent unfairness have turned to cryptocurrencies, and it would be a shame if the Binance case were to lead to the same injustices being imported into the crypto world as well.

A sidenote to the Binance case is the fact that the company’s founder – Changpeng “CZ” Zhao – was recently pardoned by Donald Trump who claimed that Zhao was the victim of an anti-crypto witch hunt by Joe Biden.

In reality, he was jailed (and his company fined $4.3 billion) because of Binance’s complete failure to maintain any kind of anti-money laundering programme. At the time, one Binance compliance staffer wrote: “We need a banner ‘is washing drug money too hard these days - come to binance we got cake for you’.” And though Zhao stepped down and Binance pledged to change its ways, it appears to have done little to stem the tide of dirty money flowing through its systems.

Zhao’s hard-to-explain pardon once again draws attention to the peculiar folkway of the U.S. pardon process. The presidential ability to pardon people derives from the States’ origins as British colonies. It is something that kings could do back in the 1770s. Technically, King Charles III can still pardon anyone he likes, though he almost never does, which is something else he doesn’t have in common with Donald Trump.

Of course there have been controversial pardons in the past, but often they come at the very end of a presidential term. Trump seems to be unusual in his willingness to hand them out this early. It must have been particularly demoralising for the prosecutors who worked hard to secure a conviction against David Gentile, only to see him released after serving just two weeks of a seven-year sentence for defrauding more than 10,000 people.

Binance denies any wrongdoing related to the Hamas case. Still, it does raise the interesting prospect of Trump having to defend his decision to pardon a man subsequently ruled to have helped Hamas move its money. But then, CZ was already convicted of helping Iranians, Syrians, North Koreans and the Russian occupiers of Ukraine move money in defiance of sanctions, and Trump hasn’t faced any backlash for pardoning him for all of that, so perhaps not.

A plague on both their houses

In unrelated but entertaining crypto news, there’s a spat brewing between the hip young dudes at Tether, and the boring old squares at Standard and Poor’s, after the rating agency cut its rating for the stablecoin issuer to its lowest possible level, which I thought was fair comment but which Tether CEO Paolo Ardoino got rather irate about. “Tether is living proof that the traditional financial system is so broken that it's becoming feared by the emperors with no clothes,” he wrote in one of a number of posts on X in which he demonstrated how little he cared about S&P’s opinion by talking a lot about it. He later posted a clip from the movie ‘The Big Short’, in which a rating agency employee defends the absurdly high ratings given to mortgage bonds before the 2007-8 financial crisis. That too, it must be said, is fair comment. It would be nice – rather like a rugby match between South Africa and England – if we could find a way for both Tether and S&P to lose.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Tether, Trump and the twisty road to transparency

Oliver Bullough — Wed, 26 Nov 2025 14:00:00 +0000

A year ago, Britain’s National Crime Agency revealed how they had busted a giant Russian-run money laundering scheme, which was helping oligarchs, propaganda outlets and spy agencies to dodge sanctions. Now, it’s back with an update on its efforts that is both hopeful and alarming.

It’s good that they’ve managed to trace the network further, linking it to Russian-Moldovan-Israeli tycoon Ilan Shor and a bank in Kyrgyzstan, but also worrying that the organisation appears still be to be functioning. Two cash couriers were busted carrying around £2 million each, which also does not suggest the organisers are too stressed: you don’t carry that much money in one go if you’re concerned about being caught.

The core of the scheme is that the money launderers collect cash from criminals all over Europe, and swap it for the cryptocurrency USDT (I published this about the issue earlier this year), and so it remains. “Tether, from what we can see, at least, appears to still be the majority token used by these networks,” a law enforcement source said.

Perhaps the most interesting difference between the boring old banks and the exciting new crypto industry is that, if a boring old bank had been so deeply involved in moving so much criminal wealth, it would have been fined a nine-figure sum and forced to radically change its ways. But Tether suffers no such indignities. Thanks to the inflation of the Trump crypto bubble, Tether made profits of $10 billion in the first three quarters of 2025, and is still coining it, despite the publicity around this operation and many other allegations of money laundering.

It now owns 116 tonnes of gold, which is more than Greece, South Korea or the UAE. Last week Tether spent a billion dollars on Bitcoin, though that didn’t do much to arrest the slide in the Bitcoin price, which as I write this has dropped by a third since its peak in early October, and erased all of its gains since Trump’s 2024 election win. Tether also claims to own $135 billion of US government debt. So, to cut a long story short, it’s basically as potent as a reasonably-sized central bank, and doesn’t have to care what a law enforcement agency thinks of it.

“Look, you can point to various different parts of the global crypto infrastructure where you would say, ‘wouldn't it be great if you could rain fire upon them?’ And me, as a law enforcement professional, would say, ‘yeah, it'd be brilliant, right?’ But obviously, I don't have that capability at my fingertips,” the same law enforcement source said, which was pretty funny but also depressing.

Obviously, there’s not much anyone can do to limit crypto while Trump controls all branches of the U.S. government and his family members continue to do so well out of it, but it would be interesting to see what might happen if the Democrats won a majority in one or both of the houses of Congress, considering some of the questions they’re already asking.

“Every time a governance token is sold, three-quarters of that money goes directly to President Trump and his family, even for sales to entities linked to North Korea and Russia,” said Senators Elizabeth Warren and Jack Reed in a letter to the Department of Justice. That’s the kind of allegation that could lead to some spicy committee hearings.

A small step towards transparency

Dr David Richard Hull gained a small footnote in the history books last week when he became the first person to verify his identity on Companies House, the UK’s corporate registry, which is trying hard to move from being part of the problem to part of the solution (at least The Dark Money Files’ Graham Barrow said he was, and Graham Barrow does tend to know).

For a long time, it was generally reckoned that the easier and cheaper it was to create a company, the more vibrant and dynamic your economy would be, and in few places was this principle applied more enthusiastically than in the UK. This unleashed a tsunami of shell-company-powered money laundering, with criminals buying British corporations for less than the price of a round of drinks, and using them to hide their identities.

Eventually, officials realised that rampant financial crime was actually bad for the economy, rather than beneficial, so brought in new checks on the identities of those creating companies. There is a lot of mess to sweep away before the corporate registry is truly cleaned up, but this is a good start, though it would be even better if some of the more far-flung bits of British territory could be persuaded to embrace transparency as enthusiastically.

There are similar registration rules in most European Union countries, although their registries are not necessarily open to everyone, as this survey from Transparency International shows. Of course, the United States has given up on its efforts to open up corporate registries, despite convincing arguments that shell companies from lax states like Nevada are a clear threat to national security.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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‘Iceberg, right ahead’ & the rise of Chinese laundries

Oliver Bullough — Wed, 19 Nov 2025 14:00:00 +0000

I’ve been reading journalist Andrew Ross Sorkin’s new book about the 1929 crash, and it’s been sending me into a bit of a spin. The parallels between the financial speculation Sorkin details and the present day are remarkable. Meme coins – like $TRUMP and $MELANIA – may be the most remarkable of recent financial innovations. They have no intrinsic value, are not intended to have intrinsic value, and yet they soar in price, enriching their issuers, before collapsing and erasing everyone’s money. Why would anyone invest in them? Is everyone stupid? Well, why did people invest in new stocks in the late 1920s, despite the vertiginous valuations?

“They were not necessarily ignorant or dumb,” is how Sorkin describes it. “They might know, or guess, that an investment pool was manipulating the price. But if they got the timing right, even a total outsider could capture a bit of the upside before the pool ‘pulled the plug’ and dumped its shares back on the market.”

It’s a weird truth about pyramid schemes: they’re actually very profitable if you get into them early enough, and no one knows when the money’s going to stop flowing so people keep investing even after they know it’s a con. There are very many places in the book when it felt like it could be about 2025 – the importance of murky lending to supporting asset prices; the corruption of the political class; the arrogance of the strutting business tycoons; the insistence that predatory practices were actually “democratising finance” and so on.

Above all, I feel a constant melancholy over how none of the foot soldiers in this campaign had any idea about the size of the wave rearing over them, and how it would sweep away everything for a generation. The subtitle of the book refers to the 1929 catastrophe as “the greatest crash in Wall Street history”, and I worry that it might before too long be relegated to being the second greatest. Buy the book, that’s my advice, while you’ve got some money to spare.

So anyway, to distract myself from the depressing nature of my historical musings, I listened to the latest episode of The Laundry podcast, which is a thoughtful and in-depth interview with Elisa de Andro Madazo and Giles Thomson, respectively the president and vice-president of the Financial Action Task Force, the world’s standard-setter on fighting money laundering.

They are articulate and clearly both care and think deeply about their institution, as well as about their roles within it. They expressed careful and coherent opinions on the need to bring fairness and efficiency and effectiveness to a struggle that has (my words, not theirs) too often lacked all three.

But, in a world in which cryptocurrencies are sweeping aside controls on finance, the United States has given up on corporate transparency, criminal groups are driving sanctions evasion, Chinese money laundering gangs are gaining ever-greater influence, and Western laws are failing to tackle kleptocrats, everything they said just seemed so irrelevant. Once again the historical parallel for the FATF was an institution in the interwar years. The League of Nations was a bureaucracy that was well-meaning, tireless, thoughtful to the end, but completely ineffective when faced with challenges from powerful nations.

Laundering drug money

I mentioned Chinese money laundering organisations (CLMOs) above, and I’d like to draw your attention to this excellent new paper, from venerable British think tank RUSI, about their scope, approach and significance. The growth of Chinese gangs, and their rapid takeover of much of money laundering conducted for organised criminal groups (OCGs) over the last decade or so, is a remarkable and ill-understood phenomenon.

The secret of their popularity is not hard to understand, as the paper makes clear: “all the profit is made in China and therefore CMLOs can afford to offer their services to OCGs in the West for free, or close to free”. Traditional money launderers were charging Western criminals perhaps 15 percent to move money, so it is clear why OCGs would prefer to take their business to someone who’ll do it for nothing.

The CLMOs’ techniques are based around transferring value globally outside the banking system (i.e. by moving luxury goods, commodities, cryptocurrencies, etc) which means that much of the compliance system created under pressure from the FATF is essentially useless in detecting their activities.

But why have they been able to launder money so cheaply when their Western rivals could not?

I think the more important point to take from this is that they have been able to create their system because of restrictions imposed in both China and the West. Chinese capital controls have made it hard for wealthy citizens of the People’s Republic to get their money out of the country. Meanwhile Western drug laws have created a huge cash-rich criminal economy. It is by connecting this demand for cash (from Chinese people outside China) and supply of cash (from drug gangs in the West) that CMLOs have been able to corner the market.

This is perhaps an unpopular opinion, but I’m going to offer it anyway: if you need another reason to take drug supplies out of the hands of criminals, CLMOs are it. Prohibition hasn’t just failed on its own terms, it has created the liquidity for a vast underground economy being exploited by our geopolitical rivals.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Dinosaur bones, lottery tickets & upside-down skyscrapers

Oliver Bullough — Wed, 12 Nov 2025 14:00:00 +0000

I am often rude about how utterly predictable financial criminals are in what they choose to buy – large watches, gold-spattered handbags, ugly yachts, etc – so I want to give a very small amount of credit to Su Binghai, a money launderer with an imagination. Okay, so he bought nine apartments in London, spending about $21 million just a week after he evaded police in Singapore. And, sure, he abandoned a collection of supercars in Singapore, all of which is tremendously dull. But then among the assets seized by Britain’s National Crime Agency (NCA) were “dinosaur remains, between 145 million and 157 million years old… of a mother and baby Allosaurus, as well as a Stegosaurus.” Dinosaurs! Aren’t they gorgeous? So much more beautiful than a boring old car.

The extinct mega-beasts were sold at a Christie’s auction last year for around $15 million, but are now in a warehouse, presumably ready to be resold, (unless the NCA plans to keep them. I can see the appeal of having something so magnificent as a dinosaur skeleton as a centrepiece in your house, although I do worry a little about the amount of dusting required, which may be why other money launderers have not invested in fossils. “I doubt that any of us will be dealing with one of these again,” said Judge Gavin Mansfield during the hearing. What a shame.

The value of the properties and fossils is a tiny fraction of the amount already recovered in Singapore in this case, which is said to have involved more than $3 billion, though it is troubling that many of the fugitives involved appear to have won effective immunity from prosecution in return for surrendering their assets.

Which cryptocurrency was involved in the scheme, I hear you ask? Well, funnily enough, it was Tether’s USDT like it always seems to be. Involvement in multiple scams has not been holding Tether back. Quite the reverse; in the first nine months of the year, it made $10 billion in profits, and expects to make $15 billion in 2025 as a whole. If Tether is not the most profitable company per employee in the world (it employs about 200 people), I’d like to know what is.

One of the few people who appears not to have been using Tether to hide illicit wealth was the former EU Justice Commissioner Didier Reynders. Though maybe he should have been. Reynders was recently charged with money laundering in Belgium in perhaps the strangest scheme I’ve read about this year. Reynders spent nearly $60,000 on lottery tickets in a single year.

Now, lotteries have been used by financial criminals for a long time. My favourite money laundering approach ever was one used in Puerto Rico in the 1980s when criminals would buy lottery tickets at a premium in cash, then (unconvincingly) explain to the authorities that their wealth was simply the result of weekly outbreaks of good fortune.

According to investigators, however, Reynders was doing something else. He was spending unusual amounts on lottery tickets and keeping the winnings. Why is this strange? Unlike gambling in a casino, lotteries are not a good way to launder money, because they distribute as prizes less than two thirds of what people spend on tickets, so you lose a huge amount on the trade. It’s really not very clever and, clearly, the unusual spending pattern raises the authorities’ suspicions. Reynders denies laundering money, and says he was just using private wealth. Whatever happened, he has a lot to explain.

The thankless task of crypto regulation

Reynders may not have tried to launder money via crypto, but many financial criminals do. And over in Washington, DC, regulators have got to do the boring-but-important work of figuring out how exactly the new GENIUS act controlling stablecoins will be implemented in practice. So credit to Transparency International U.S. for attempting to bend things in the direction of sanity. “A well-implemented framework can both support responsible innovation and prevent the kinds of corruption and financial crime that erode trust in financial systems and global markets,” it wrote in a letter to the Treasury Department.

Bitcoin prices may have taken a bit of a dip of late (no doubt irritating Donald Trump), but the crypto enthusiasm stoked by the White House shows no sign of abating. Senate Democrats sent a letter to the attorney general after Trump’s pardon of former Binance CEO Changpeng Zhao with a killer final question/essay prompt: “Do you believe President Trump’s substantial business ties to Mr Zhao influenced his decision to issue a pardon? Explain.”

Richard Teng, who now runs Binance, has denied that his company supported Trump’s own (largely moribund) stablecoin USD1 to curry favour with the first family on his predecessor’s behalf. But considering quite how much money the Trumps have made this year (Trump’s net worth has risen by $3 billion, according to Forbes), it seems unlikely they’ll concern themselves overmuch with the rules, let alone the complex, detailed rule-making around the GENIUS act. On the one hand, this leaves the field open for organisations like TI-US to push for good regulations; on the other, Trump will do what he wants, regardless of the regulations.

The Neom debacle

Trump, though, is not yet a law unto himself. Unlike, say, the Saudi royals. I have a slight obsession with Neom, Crown Prince Mohammed bin Salman’s pet development involving a ski resort, a superyacht harbour and The Line, a ludicrous mirrored linear city which a gazillion architects have been designing at a gigundous profit. Anyway, thanks to the FT, we have a deeper dive into this vainglorious horror show than we’ve ever had before.

There are many, many cars in this pile-up: the 30-storey building that would supposedly hang from the top of an arch over the harbour, despite architects warning that it would inevitably fall on everyone’s yachts below; the “hundreds of shuttle cars running back and forth” to pick up the poo because normal sewage systems couldn’t be made to work; the fact no one realised that buying more than half of the world’s steel each year to build Neom would affect steel prices; the airport shuttle envisaged without any room for luggage; the giant pumps required to circulate water in the giant marina; the disaster in store for migratory birds faced with a 500- metre high, 170-km wide mirror and so on and so forth.

“I was in a conversation one day with two physicists, quantum physicists,” says Antoni Vives, then Neom’s chief urban development officer, in a documentary about The Line. “One of them looks at the other and looks at me, and says: ‘you know what, perhaps it’s the time of the poets now. We need poets’.” No, Antoni, we need satirists. Or maybe sedatives.

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Dubai’s blockchain blues & the Kyrgyz ‘cryptatorship’

Oliver Bullough — Wed, 05 Nov 2025 14:00:00 +0000

Last week I went to Dubai. I didn’t much like it; Dubai feels as if the brief was to build a city but to leave out all the things that make cities good. Then again, I was there for a crypto conference. And my overall impression of that was – if Western sanctions are indeed shutting Russians out of the world economy, someone should tell the Russians.

The free ice cream at the gate was sponsored by a crypto company promising seamless exchanges between roubles and the dollar stablecoin USDT; an exhibitor offered to deliver you cash in an hour when you transferred them some crypto; and the title sponsor was A7A5, fresh from being sanctioned by the European Union, but very much alive, kicking, and cheerfully distributing stickers to people who took a spin on its wheel of fortune.

The centre of the hall was dominated by a crypto-trading competition, in which a number of people sat behind screens and sought to make a profit while against the clock. Despite the best efforts of two fast-talking Russian MCs, as a spectator sport, it had all the charm of watching an HR department finishing up the month’s payroll. Still, the competition drew the biggest crowd simply for the lack of other things going on.

None of the whales that might once have come to a Dubai crypto conference were present, now all the action has spectacularly moved to Washington, DC. Check out this Reuters investigation into how much cash The Trump Organization has made in just the first six months of 2025: “the U.S. president’s family raked in more than $800 million from sales of crypto assets in the first half of 2025 alone”, with “potentially billions more in unrealized ‘on paper’ gains”, mostly from foreign sources.

Those who did make it to Dubai intoned the usual verities about crypto ushering in a new age of liberty, despite the huge contradictions all around them. Particularly bewildering was a panel featuring Vít Jedlička, a Czech libertarian and founder of “start-up nation” Liberland, alongside Nabil Arnous, whose job is to bring investment into “Innovation City”, a newly-renamed AI-powered free trade zone in the absolute monarchy that is Ras Al Khaimah, one of the seven emirates that make up the UAE. The blockchain is powerful indeed if it can unite people from such supposedly opposite political poles.

Even more head-scratching to me though was a presentation by Reeve Collins, who co-founded Tether and was an early advocate of all things crypto, He came to Dubai to pitch his idea for “white label” stablecoins which would allow companies to put their name on a dollar-pegged cryptocurrency while leaving all the hard work of running the blockchain to someone else.

Why might companies want to do that? Because every time they sell something, they get to collect even more data about their clients than they already do, as well as earning profit from issuing money that currently goes to the government.

“Since this is programmable money, you get real data on all of the users, and you get to understand who are the power-users, who deserves more, who deserves to be rewarded,” Collins said. “This is loyalty points times a thousand. It really will supercharge what companies are able to offer their users, so they'll be able to extract more value.”

I kept expecting someone to speak up and point out how far his vision had strayed from cryptocurrencies as a tool for individual autonomy, rather than a tool that enables the world’s largest corporations to frack humanity even harder than they are now. But no one did. Instead, the conference moved onto a panel about how governments couldn’t be trusted.

At some point the music will stop, and none of us will have chairs, and there will be an almighty blow-up. The prospect slightly terrifies me.

Kyrgyzstan's crypto compulsion

For now, though, the music is very much still playing. Particularly in places like Kyrgyzstan, which seems to be doubling down on its strategy of becoming a ‘cryptatorship’ like El Salvador. Binance founder Changpeng Zhao, the crypto billionaire who pleaded guilty to violating U.S. anti-money laundering laws and was recently pardoned by Trump – though the U.S. president claimed not to know Zhao – headed to Bishkek to talk up its transformation. “Had a great time in Kyrgyzstan in the past two days. I encourage more crypto companies to explore the country too,” he Xed.

There are already a number of crypto companies in Bishkek, including the sanctioned A7A5, and their close connections with the Kyrgyz government are of great interest to the country’s journalists. However, since Kyrgyzstan’s best investigative outlets – Kloop, Temirov Live and Ayt Ayt Dese -- have just been labelled as extremists, it will be difficult for reporters to bring attention to their findings.

“This is the first time in the history of Kyrgyzstan when media outlets have been labelled extremist,” said Kloop in a statement. “Now it is dangerous to like or share outlets’ material, or to circulate it. That could all be considered support for extremist organisations and the circulation of extremist material.” At least, “watching and reading it is currently safe.”

There used to be something admirable about Kyrgyzstan’s bloody-minded refusal to become a dictatorship like the other republics of Central Asia. Now there is something grotesque about the fact that it is the lure of crypto, a technology supposedly intended to enhance freedoms, that is helping to cement autocracy. The country is holding snap parliamentary elections on November 30. The president’s party, unsurprisingly, is expected to do very well.

Watching Kyrgyzstan heading towards autocracy is a reminder that the only plausible long-term solution to kleptocracy is for rich countries to stop enabling it. If Westerners started living up to their professed values, and made it impossible for crooks to buy property and launder money in the West, it would reduce the appeal of being one.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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A warning from the Gilded Age & an ‘end’ to the Khodorkovsky saga

Oliver Bullough — Wed, 29 Oct 2025 13:00:00 +0000

I read a lot of history books and often find myself wondering about how current events will be interpreted by future historians. I appreciate that some people might see this as an overly optimistic practice (“get real, loser, there won’t even be historians in the future, let alone ones able or willing to objectively interpret the past” etc) but I still find it valuable as a way to create a sense of perspective that can otherwise be hard to find.

So, what will historians make of the latest developments in the United States? On Thursday, the government sanctioned Russia’s two most significant oil companies, in what threatens to be a massive blow to the financial underpinning of a key geopolitical adversary. On Friday, however, the government pardoned Changpeng Zhao, a crypto tycoon who two years ago pleaded guilty to, among many other things, facilitating sanctions busting by Iran, also a key geopolitical adversary.

How do you interpret that contradiction, or the fact that the US government is currently not paying its employees, while spending hundreds of millions of dollars, albeit privately raised, on a new ballroom? This could provide material for a hundred newsletters, and no doubt has already done, but I think there is value in asking whether the sole consistent factor here is inconsistency, and whether that itself is significant.

This is what happens when individual people make decisions without oversight, scrutiny or process and, although there may be some value in rapid decision-making, it also makes it far more likely that the decisions reached will be illogical, inconsistent and corrupt. I have been reading a lot recently about the last time inequality was as high as it is now, which was the time before World War One, a time that Americans call the “Gilded Age” and Brits call the Edwardian period. That too was a time of conflicts, inconsistency and excess, when plutocrats built ludicrous houses for themselves, and awarded themselves vast pay deals, when politicians got assassinated and political movements appeared and disappeared with dizzying speed.

I try to be optimistic, because there’s no sense in being otherwise, but the parallel is worrying. After all, the period before World War I all ended with World War I. If I were a plutocrat, I would be working very hard to steer the horse in another direction, away from disaster, rather than spurring it on ever faster.

Restitution from Russia?

But look, like a refugee from a different galaxy, here comes news of what should be the end of the long-running legal challenge brought by shareholders in the ex-oil company Yukos against the Kremlin’s expropriation of their assets. The Kremlin lost, and now the shareholders can seek to claim tens of billions of dollars from state assets worldwide. This saga sort of began 22 years ago when the Russian authorities arrested the country’s richest man, Mikhail Khodorkovsky, prosecuted him, and imposed such vast back tax bills that it could auction off his assets in a process that – funnily enough – was won by a state oil company run by a close ally of Vladimir Putin. It was an early sign of the kind of country Putin was building: kleptocratic, authoritarian, centralised, ruthless, and deeply stupid.

But the real beginning of the story was a decade earlier, when President Boris Yeltsin, attempting to build a different kind of Russia, one which followed international norms, signed the Energy Charter Treaty, an agreement designed to protect foreign investors’ stakes in national oil and gas industries.

The primary shareholders of Yukos were Russian but, like any competent global oligarch, they structured their ownership via multiple offshore entities so – when their company was taken away – they sued. And now, they have won in a process that is a memorial to the 1990s, and the odd alternate reality when globalisation was widely considered a good thing.

Obviously, Russia won’t abide by the judgement on its own territory, but the Yukos shareholders will continue their battles for various assets owned by Russia, such as this plot of land in London and these vodka brand names. “Real justice requires successful enforcement, so we will now focus all our efforts on enforcing against Russian state assets worldwide until every penny of the $65+ billion awards has been paid,” said Tim Osborne, who heads the shareholders’ company, which is called GML.

In that effort, however, he may well have competition. There is 210 billion euros of Russian state money frozen in the European Union, mostly in Belgium, and the EU is inching closer to using it to help Ukraine. The universe in which Russia happily deposited its assets in Western countries now feels like an alternative reality – one that historians will spend a lot of time dissecting.

Making criminals pay

International arbitration is a tricky game to play, however, or so the owners of P&ID may be feeling. In a complex (and, let’s be honest, rather imaginative) attempt to swipe a lot of Nigeria’s money, this small offshore company obtained a gas processing contract in 2010. Neither side did anything to fulfil the contract, then P&ID sued Nigeria and won a giant compensation award, the size of which has been growing larger still with the interest owed.

It is a case rife with allegations of corruption, professional misconduct and more, and mercifully the initial judgement in favour of P&ID was overturned. Last week, a court ruled that P&ID will have to pay the vast legal costs in sterling, rather than in naira, which will help Nigeria to avoid missing out on the advantageous exchange rate.

To say P&ID’s British lawyers have questions to answer is to understate how serious the allegations against them are, but regulators have so far done nothing. That is a very bad reflection on Britain’s ongoing facilitation of kleptocracy, and the state of its regulators.

Britain, in common with many other countries, has a very fragmented system of anti-money laundering regulation, so it is potentially good news that the government has proposed to combine many of the existing 23 regulators into “a small number” of bodies. Hopefully, this will mean the regulators are better funded, more motivated, and more willing to anger potentially powerful vested interests by actually investigating financial crime. “It is crucial that existing regulators do not take their foot off the pedal while we await legislation which could risk things getting a lot worse before getting better,” said Sue Hawley, of Spotlight on Corruption.

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A record Bitcoin haul & crypto comes to the Pitcairn Islands

Oliver Bullough — Wed, 22 Oct 2025 13:00:00 +0000

A couple of weeks ago I wrote about the U.K.’s seizure of 69,000 bitcoins (that’s worth around $7.7 billion) from a Chinese fraudster, and gave the impression it was a pretty big deal. But then, rather in the manner of Crocodile Dundee and knives, the United States revealed what it was packing.

“The Justice Department’s National Security Division [filed] a civil forfeiture complaint against approximately 127,271 Bitcoin, currently worth approximately $15 billion,” the DoJ announced last week. Now that really is a big deal (it’s not far off the total BP paid to settle charges over the Deepwater Horizon oil spill in the Gulf of Mexico). There can only ever be 21 million bitcoins in existence, so this seizure accounts for more than one in 200 of them.

The seizure was part of a case against Chen Zhi, a Cambodian businessman charged with being behind some of the most appalling forced-labour fraud compounds in Southeast Asia. Every aspect of the alleged scheme, from its targeting of vulnerable people in Western countries, to its reliance on trafficked labourers, is foul on its own but cumulatively, it’s beyond dreadful.

The money laundering techniques were complex and multi-jurisdictional, and the profits were spent on the usual expensive trash: “watches, yachts, private jets, vacation homes, high-end collectables, and rare artwork, including a Picasso painting purchased through an auction house in New York City”.

And of course there were shell companies in the British Virgin Islands and properties in London, because there are always shell companies in the British Virgin Islands and properties in London: a £12 million mansion near Primrose Hill; a £100 million office building in the City; plus various flats in the Centre Point building, and others in Nine Elms, a newly-built neighbourhood where many of the off-plan apartments went to cash purchasers from the Far East.

(Nine Elms is also, incidentally, home to the new U.S. embassy and a few years ago I did a talk for staffers interested in financial crime and one asked why, if there was so much money being laundered in London, none of it was visible. I drew his attention to the view from the window.)

The U.S. government earlier this year said it will place any bitcoin it seizes into a strategic reserve. I suppose a crypto reserve sort of makes as much sense as a gold reserve, at least until people lose interest in crypto and/or the power goes off. But there is a problem with the basic idea here: these bitcoins don’t belong to the United States. Assuming that the criminal complaints are proven, then this money is the fruit of crimes committed against millions of victims, and should be returned to them, whether in the form of bitcoin or whatever, not stashed away in Washington.

Some commentators have said cryptocurrencies help fight financial crime. In a blog, Elliptic, a blockchain analytics company, argued that “blockchain technology enables comprehensive visibility into financial flows, empowering all ecosystem participants to play a crucial role in identifying and reducing illicit funds.” But I don’t think that’s the message I take from this.

If the two biggest asset seizures of all time have come one after the other in the form of bitcoin, I think the important question to ask is “why do criminals have so much of their wealth in cryptocurrencies?” If crypto is helping baddies to hide their money more than it’s helping goodies to find it, then it’s more of a problem than it is a solution.

The Pitcairn crypto plan

Thanks to an Australian reader for tipping me off to an odd situation in the Pitcairn Islands, the only British Overseas Territory (BOT) in the Pacific, and the smallest territory in the world by population. Pitcairn has fewer than 50 inhabitants and is extraordinarily remote so unlike most BOTs – the Cayman Islands, the BVI, Gibraltar, Anguilla, etc – it has never developed an offshore financial services industry.

Anyway, it seems that in January 2020, Justin Sun – the Chinese-born billionaire head of the crypto giant TRON; prime minister of Liberland; first Kittitian in Space; former Grenadian ambassador extraordinary and plenipotentiary to the World Trade Organisation; eater of a $6.24 million banana; and early investor in Donald Trump’s crypto company – explored the possibility of turning Pitcairn into a crypto haven. According to the minutes of the meeting with the island’s council, three of Sun’s representatives were there on a friend-making mission: “TRON is looking to partner with a BOT to work together to craft regulations etc to help make crypto currency more mainstream.”

There was “a lot of community interest” among the locals for carving up this unexpected cash cow, but fate intervened in the form of a killjoy governor, who represents the U.K. in these parts. “TRON will not be permitted to establish bitcoin/crypto currency”.

According to one academic’s assessment of things, “a company with such a variable track record was never going to be afforded a foothold in the territory.” And, generally speaking, that should have been the end of the matter, leaving us with nothing more than a ghostly alternative timeline in which Pitcairn is a crypto hub (or, perhaps, a 21^st century version of Nauru) and its few-dozen residents are multi-billionaires.

None of this has been confirmed by Tron, so I only have the Pitcairn administration’s documents to go on but it appears that the company did not in fact go away quietly. Instead, in order to “garner favour”, it began to provide solar panels to Pitcairn residents. An attempt by the governor to stop this collapsed, given that everyone really wanted them, and by July 2023, the council’s meeting minutes noted: “we all have solar units donated from TRON on our roofs”.

My Australian interlocutor informs me that Pitcairn residents are unsurprisingly now super-enthusiastic about Tron for having provided them with free electricity, though loath to publicise it. This year Tron advertised for a Project Director (Pitcairn Islands Development) to lead “a humanitarian infrastructure development project aimed at improving the medical and accommodation conditions of 35 indigenous fishermen residing on Pitcairn Island", and is now looking for a “Legal Counsel (Pitcairn Islands Development)”.

Something’s happening here and I don’t know what it is, but if I worked for the British government I’d be trying to figure it out. Justin Sun’s stated philosophy is underpinned by the libertarian creed of “no forced obligations, no taxes, and no mandates”. It would be a challenging development if, now that he’s provided Pitcairn with free power, he managed to bring the islanders around to that point of view.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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A tale of two Bitcoin billionaires

Oliver Bullough — Wed, 08 Oct 2025 12:53:30 +0000

There have been some pretty chunky fines imposed by U.S. authorities for money laundering offences over the years. HSBC paid out $1.9 billion in 2012 for moving cash for Mexican mobsters; Goldman Sachs settled for $2.9 billion after being charged with helping kleptocrats loot a Malaysian sovereign wealth fund; and Danske Bank had to cough up $2 billion for moving vast sums for corrupt ex-Soviet officials.

I mention these amounts to put into perspective quite how ginormous the confiscation order secured last week by London’s Metropolitan Police against Zhimin Qian was. She could have paid all the fines imposed for those iconic acts of financial skulduggery in full, and still have had enough left over to buy the most expensive home ever sold, splash out on the most expensive car ever bought, and have a few millions left over for spending money. Before her wealth was snatched away, her net worth matched that of Donald Trump, who’s done pretty well himself over the last, hmmm, nine months or so.

“Between 2014–2017, Qian orchestrated a large-scale fraud in China through defrauding over 128,000 victims and went on to store the illegally obtained funds in Bitcoin assets,” the Met said. She fled to the U.K., where she was arrested last year, and her devices containing the keys to access her 61,000 bitcoins were seized.

There is a little bit of an asterisk next to the size of the seizure, however, since the bitcoins weren’t worth nearly as much when she bought them with stolen money as they are now. At the end of 2018, the year when the inquiry into her crime was launched, her bitcoins were worth around $228.5 million. That is obviously still by any standards a lot to steal but the cryptocurrency has had a wild ride since then, and her haul is now worth $7.24 billion and counting.

Qian had promised to triple the investments of the people she defrauded, but she actually increased them thirty-fold by stealing the cash and sticking it in bitcoin.

This episode raises some very interesting issues. What happens to the money? Obviously, her victims should get their money back, but what return should they get: just a standard interest rate, which is better than the nothing they have at the moment; the 300 percent she promised them, which would in ordinary times be awesome; or a proportionate share of this incredibly successful crypto-investment? If I was in the U.K. government, I would be arguing for the first option, but if I was in the Chinese government, I’d be aiming for the last.

Western law enforcement agencies normally struggle to get any kind of cooperation from their Chinese counterparts, but this case appears to be an exception. “Through a meticulous investigation and unprecedented cooperation with Chinese law enforcement, we were able to obtain compelling evidence of the criminal origins of the cryptoassets,” stated Will Lyne, head of the Met’s Economic and Cybercrime Command, which is something I have never heard a senior copper say before.

Could this be the prelude to an unprecedented thawing in relations between the U.K. and China, and the dawning of a new appreciation, nay a respect, for the rule of law in Beijing? Or could it just be that Xi Jinping’s people want a chunk of that $7.24 billion? The jury’s out. And it will remain out until those pesky jurors learn to do what they’re bloody well told.

There are some pretty odd, if compelling, details in this whole affair. “Zhimin Qian dreamt that the Dalai Lama would anoint her a reincarnated goddess,” reported the FT, “and that she would go on to become the Queen of Liberland, an unrecognised micronation on the Danube, where she would build the biggest Buddhist temple in Europe”. Qian travelled to the U.K. with a passport issued by the Caribbean nation of St Kitts and Nevis, which she applied for under the false name of Yadi Zhang.

St Kitts pioneered the whole “citizenship by investment” idea in partnership with Henley & Partners, and has done very well from it, as is abundantly obvious if you visit this extremely beautiful country. It may, however, be time for the rest of the world to start wondering why we are quite so happy to offer its “citizens” visa-free travel if this is the kind of person it sells passports to.

Another citizen of St Kitts and Nevis is the blockchain billionaire Justin Sun, who in August became the first Kittitian to sort of go into space. He travelled just beyond the official boundary on one of Jeff Bezos’ New Shepard rockets, which are so ludicrously appropriate in their phallicness that each trip is almost performance art.

Sun’s involvement in libertarian fever-dream Liberland, unlike that of fellow Kittitian Zhimin Qian, is no mere fantasy. He has been elected prime minister, and says the microstate “is a manifestation of a political philosophy that champions liberty, minimal government intervention, and individual autonomy”. Sun, notoriously, was one of the attendees at a private dinner hosted by Donald Trump in May for the top investors in his meme coin $TRUMP. The dinner was the culmination of Sun’s transformation from a fraudster charged by the Securities and Exchange Commission to a celebrated business associate of the U.S. president. Sun runs the TRON blockchain, which was home to more than half of all illicit crypto activity last year, according to TRM labs. To be fair, if I was in charge of that kind of business, I suspect that I would be in favour of “minimal government intervention” too.

The contrast between Sun’s fate and that of Qian couldn’t be more striking. The former, however shady his business dealings, gets to dine at the White House, while the latter is scheduled to be sentenced in a British court next month. If only Qian had invested in Trump’s meme coin?

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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The Tehran-Washington crypto connection

Oliver Bullough — Wed, 24 Sep 2025 13:34:11 +0000

There is a saying that the best way to make money during a gold rush is to sell picks and shovels. The worst way, presumably, would be to run a government taskforce drafting regulations for the retailers of picks and shovels.

Perhaps relatedly, Bo Hines – who from January to August was the executive director of President Donald Trump’s council of advisors on digital assets – has been hired to run the US operations of Tether, the company behind USDT, the world’s largest stablecoin. USDT is a cryptocurrency that functions a little like a pick/shovel does during a gold rush. Now Tether will release a new U.S.-based stablecoin called USAT.

Anyone alarmed by the implications of Hines changing sides can be reassured. There is no conflict of interest, because Hines himself said so: “I stepped down from my roles touching anything related to crypto in the White House and I felt like this was a fantastic opportunity to jump into the private sector.”

It must have smarted for Hines to be languishing in the public sector drafting regulations for the crypto rush, while in the private sector people – including family members of senior administration officials – were making billions of dollars. USDT, the stablecoin Tether has created for the US market, is being marketed in partnership with Cantor Fitzgerald, which is run by Brandon Lutnick, son of Howard Lutnick, the U.S. Secretary of Commerce, so that too is being kept in the family.

In order to guarantee that Tether’s tokens will always be worth the same as a dollar, it owns a lot of US debt: some $127 billion worth at the end of July, which works out basically as $127 billion of free money for the U.S. government.

“Tether is by far and away the most important private-public partnership the U.S. government has, we’re buying more treasuries than anyone else in the private sector,” said Hines, which is an interesting way of defining ‘important’. Once upon a time, the major defence contractors would have ranked top of the list, but now it’s a company that buys debt so Trump can keep cutting taxes for his friends.

This is not to say the U.S. government isn’t concerned about crypto. The Office of Foreign Assets Control has sanctioned Iranian nationals, Alireza Derakhshan and Arash Estaki Alivand, and a network of foreign enablers, who were selling Iran’s oil to raise money for its armed forces via the medium of cryptocurrency.

“Iranian entities rely on shadow banking networks to evade sanctions and move millions through the international financial system,” said John Hurley, Under Secretary of the Treasury for Terrorism and Financial Intelligence. But you’ll scour that press release and related documents in vain for information about what specific cryptocurrency was being used by the Iranians to finance the sale of hundreds of millions of dollars worth of oil. Luckily, you can turn to this bit of analysis from Elliptic: “Alivand’s addresses have received a total of $300 million, while Derakhshan’s have received $442 million, mostly in the USDT stablecoin”.

Oh.

So, Iran sells oil for USDT; which creates demand for Tether; which buys US government debt. Cut out the middleman and essentially, thanks to the magic of the blockchain, the Iranian and US governments are in business with each other.

It seems a bit weird that the United States so enthusiastically prints $100 bills even though the only significant market for them is organised criminals, who do far more damage than the U.S. makes in profits from the trade. And it’s very disturbing that the government IS making the same mistake with cryptocurrencies.

TUVALU AHOY!

One of the annoying things about financial skulduggery is that new techniques keep getting invented all the time, even as the old techniques remain as useful as ever. If crypto is offshore’s newest manifestation, then flags of convenience are probably its oldest.

Ships have been flying other countries’ flags as a ruse de guerre for centuries, but it only really became a formalised business technique in the 1920s when American vessels reflagged as Panamanian so they could sell alcohol during prohibition. But as with everything offshore, a trick invented for naughty rich folks – in this case so they could drink cocktails without legal consequences – has morphed into a tool for criminals and scumbags to make life worse for everyone.

Flags of convenience are almost ludicrously artificial, even by the standards of other offshore trickery, in that registries often have only the sketchiest relationship with the country they’re nominally part of. The Palau, Marshallese and Liberian ship registries are all in the United States (as was Panama’s, until recently); St Kitts and Nevis’ is in the UK; Tuvalu’s is in Singapore; Togo’s is in Lebanon, etc. Small countries are basically just hiring out their sovereignty so foreigners can do dodgy stuff with boats.

The most recent manifestation of this is in Russia’s shadow fleet of ageing oil tankers, some of which lost their Liberian flags and re-registered under the flag of Gabon (effectively a private company based in the UAE), as they sought to continue evading Western sanctions while they sail through the English Channel. “The ease with which vessels can obtain flags without scrutiny, avoid ownership transparency and escape enforcement actions has created the conditions for an entire parallel shipping ecosystem,” notes the Royal United Services Institute (RUSI) in this fascinating paper.

Western countries have sought to do something about this, and some larger registries have become more compliant under pressure, but that has just encouraged new countries to hire out their flags to all-comers, including “Cameroon, Comoros, Gambia, Honduras, Mongolia, São Tomé and Príncipe, Sierra Leone and Tanzania”. RUSI calls for states issuing flags of convenience to be checked by the Financial Action Task Force, which raises the prospect of blacklisting for rogue actors.

I am not as a rule a big fan of the FATF (or indeed of how it goes about blacklisting countries), but the situation has got so bad, that perhaps it is the only body that could now make a difference and head off consequences that are almost impossible to overestimate. “Without such action, the shadow fleet will continue to entrench itself as a parallel system that threatens financial security, undermines legal norms, poses immeasurable environmental risk and raises the threat of geopolitical escalation,” RUSI’s paper concludes.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Russian sanction-dodgers, Chinese gangsters & Mexican cartels

Oliver Bullough — Wed, 17 Sep 2025 12:51:48 +0000

The full-scale invasion of Ukraine happened more than three years ago, which means full-scale Western sanctions on Russia did too. Concurrently, Russians have had just as long to figure out ways to dodge those sanctions, and I fear Western countries are being a bit too slow in realising quite how good they’re getting at it.

So, props to Transparency International’s exiled Russian chapter for this excellent report on the new laundromat, which has grown out of the Garantex crypto exchange that was shut down in April after a multi-year, multi-country effort. There is something grimly depressing, if inevitable, about the fact that within days of Garantex being snuffed out, it had been reborn.

“It reemerged under new names, such as MKAN Coin, Grinex, and Exved, morphing into a decentralised laundering system sustained by technical obfuscation and governments’ tolerance,” TI-Russia notes. “Entities tied to Garantex continue operating across UAE, Brazil, Kyrgyzstan, Spain, Thailand, Georgia, Hong Kong, and Russia.”

Powered by the encrypted messaging app Telegram, the skilled launderers behind Garantex’s successors are learning to mitigate their vulnerabilities, rather like bacteria evolving in response to antibiotics. And they have found helpful new hosts, particularly in Kyrgyzstan.

The rouble-pegged stablecoin A7A5 is, according to Chainalysis, operational largely in office hours, which suggests it is operating more like a shadow bank than the kind of cryptocurrencies beloved of speculators in the West. By the end of July, more than a billion dollars’ worth of transactions were moving through A7A5 every day, with it being used as a bridge between roubles and the dollar-backed cryptocurrency Tether, adding a layer of obfuscation that helps to obscure connections between Russian sanctions-busters and the big crypto operators.

There is nothing too surprising about this: money launderers have nimbly adjusted to limits on their activities ever since there have been attempts to limit those activities. In many respects, the way that Garantex’s successors have spread across jurisdictions, taking advantage of mismatches between legislation and law enforcement capabilities, is just a digital-age copy of the way the drug cartels’ bankers operated in the Caribbean in the 1980s.

Nonetheless, it is depressing that Western governments appear not to be learning as rapidly as their adversaries, and instead are relying on the blunt instrument of sanctions, rather than engaging more proactively with the causes of the problem. This is not to say that sanctions do not have their uses. They are obviously useful as a first step, and clearly very irritating to kleptocrats, otherwise they wouldn’t fight so hard to overturn them.

For instance, Viktor Yanukovych, the corrupt former president of Ukraine whose disastrous tenure sowed so many of the problems that are causing death and misery today, has been fighting to cancel European Union sanctions against him for more than a decade. He’s now failed to have the courts overturn those sanctions, as has his son, which is wonderful. Yanukovych always seemed to have a tenuous grasp on reality, and this is nowhere more in evidence than in the apparent plot to reinstall him as president of Ukraine after the Russian full-scale invasion, which is detailed in the court’s judgement. The idea that anyone in Ukraine wanted him back goes way past self-confidence and deep into the territory of profound delusion. A weird but true aside: Yanukovych’s press secretary once bit me on the arm to prevent me asking him a question about a ludicrous inconsistency in a speech he’d just made; it was very painful, and very effective.

CHINESE GANGS & MEXICAN CARTELS

Much of the early structures used by money launderers were created in the 1950s and 1960s to serve wealthy people looking to dodge the era’s strict capital controls and high taxes. Just as today, it is the desire of wealthy Chinese people to evade capital controls that drives innovation and growth in money laundering methods.

“Chinese money laundering networks are global and pervasive, and they must be dismantled,” said FinCEN Director Andrea Gacki. “These networks launder proceeds for Mexico-based drug cartels and are involved in other significant, underground money movement schemes within the United States and around the world.”

The core of the system is that Mexican cartels are earning huge amounts of cash dollars, which they are unable to pay into banks. So they hand them over to Chinese gangs, which in turn sell them to wealthy Chinese people looking to spend in the West. The circle is completed by the Chinese gangs shipping counterfeit goods, precursor chemicals or other things that the Mexicans need.

FinCEN has issued an advisory with guidance on what Chinese Money Laundering Networks look like, which makes very interesting reading, especially its long list of “red flags”, each one helpfully illustrated by an actual red flag. The trouble of course for the U.S. authorities is that most of the action happens outside their oversight.

With one exception: the White House could always seek to limit the printing of cash dollars that are the lifeblood of the whole system. At the very least, it could stop printing so many of the super-convenient $100 bills. But it’s not doing that. On the contrary, the value of dollars in circulation hit a new all-time high in July.

TAKING BACK ILL-GOTTEN GAINS

Among the curious folkways of British politics is that TV dramas have far more impact on political discussion than even the most considered bit of journalism. Misha Glenny’s book, McMafia, came out in 2008 and received excellent reviews for its forensic analysis of organised criminality. But it was only when a TV drama of the same name appeared a decade later that U.K. politicians woke up to London’s central role in laundering the world’s criminal wealth.

They nicknamed a new legislative proposal “the McMafia law”, and promised it would drive kleptocratic wealth out of London. Spoiler alert: life is not a TV drama, and there was no happy ending. Lawyers fought back, and the impact of the Unexplained Wealth Order was limited.

But, wait, what’s this? The Serious Fraud Office has used an Unexplained Wealth Order to confiscate a 1.1 million pound house! So there is life in the old law yet. Granted the target was not a kleptocrat, but a fraudster; the house was not in London, but in the Lake District; and 1.1 million pounds is a rounding error compared to the 100 billion pounds or so of criminal wealth estimated to pass through the UK financial system every year. But a win’s a win, and they deserve congratulations. “Unexplained wealth orders offer investigative opportunities to pursue assets on behalf of victims and taxpayers. This is our first successful use of this legislation and it certainly won’t be the last,” said Nick Ephgrave, Director of the Serious Fraud Office. Hooray for that.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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Criminal dollars, Trump’s crypto trapdoor, and Dalek solicitors

Oliver Bullough — Wed, 13 Aug 2025 12:48:51 +0000

There has been much speculation in financial circles that the White House’s erratic policymaking, random tariffs, and general shoot-from-the-hip approach could undermine the global role of the dollar, which could perhaps be replaced by the euro. I have no insight into that but I am confident that Europe’s single currency won’t replace greenbacks as criminals’ favourite money laundering tool any time soon.

Ordinary people are using cash money less and less in everyday life, so logically the amount of banknotes in circulation should be falling. Particularly at a time of high inflation, when a non-interest-bearing form of money is losing value all the time. This is what is happening in the eurozone, where the value of cash in circulation hit its all-time high in June 2022 of €1,602.6 billion, which was €16.2 billion more than the total today.

In the United States, on the other hand, the total number of dollars in circulation hits a new high every month, and in July reached $2,399.538 billion. That is an increase of $121.6 billion since June 2022, or just over five percent. The only people willing to hold paper currency when inflation is high are people who have a compelling reason not to care, and I think the only significant group of people that meet that requirement are criminals who seek anonymity.

So while financial markets may find an alternative to the mighty dollar, at least the United States can count on the continued custom of the world’s criminals. Interestingly, the pound is behaving more like the dollar than the euro, with the total in circulation having increased by 5.9 percent since June 2022 to £93.6 billion. And the same is true of the Canadian dollar (up three percent). So I suppose an alternative explanation is that criminals just like speaking English?

BANKS CAN’T CLOSE CRYPTO BACKDOOR

Of course one of the drivers of the dollar’s supposed decline is America’s geopolitical rivals creating new payment mechanisms outside of the Western system. Iran, under severe sanctions, has sought to create new routes for money to flow and the United States – including as recently as last week – has tried to stop that from happening.

“As a result of President Trump’s maximum pressure campaign and increasing isolation from the global financial system, the Iranian regime is running out of places to hide,” said Secretary of the Treasury Scott Bessent. “Treasury will continue to disrupt Iran’s schemes aimed at evading our sanctions, block its access to revenue, and starve its weapons programs of capital in order to protect the American people.”

Meanwhile, Trump has signed an executive order stopping the previous practice of encouraging banks from being highly sceptical of crypto clients, much to the delight of said clients. “It used to be that corresponding banks in the US block transactions involving crypto (fiat for buying crypto). This opens banking for crypto internationally,” tweeted Changpeng Zhao, founder of the giant Binance exchange.

But what does this mean for Iran? Iranians were already using crypto to evade sanctions, despite efforts by some of the better-connected companies to keep a lid on them.

“Iran’s government maintains extensive control over the country’s financial system, including cryptocurrency infrastructure,” concluded Chainalysis in an analysis published earlier this year. “Cryptocurrency represents an alternative financial system, and the increasing use of Iranian crypto exchanges suggests that more individuals and institutions are resorting to crypto to safeguard wealth and circumvent financial restrictions.”

I’m struggling to think of an analogy for what the U.S. government is doing here in its policy towards Iran’s illicit financial flows. By sanctioning the Cross-Border Interbank Messaging System used by Iranians, it’s shutting the door, but by banning U.S. banks from doing due diligence on crypto companies, it’s demolishing the wall.

AN ATTACK OF CONSCIENCE

British real estate has been the investment of choice for kleptocrats for years, thanks to the country’s toothless regulators, conscience-free lawyers, and biddable politicians. But the war in Ukraine created much soul-searching in Britain about what exactly its approach had enabled, and a long-overdue re-examination of the system finally began, with – apparently – actual real-world consequences.

“British lawyer Rory Fordyce has been ordered to pay £32,500 for failing to adequately vet funds linked to the family of Azerbaijan’s former security chief,” reports the Organised Crime and Corruption Reporting Project (OCCRP). “In addition to the fine, Fordyce was barred from holding any legal management or compliance roles for five years and was ordered to pay £50,000 in legal costs.” And as if that wasn’t enough for the Solicitors Disciplinary Tribunal, a specialised court that brings cases against certain kinds of lawyers, it has also decided to prosecute another lawyer for making threats against people criticising the huge Ponzi scheme OneCoin, after detailed allegations were made by the Tax Policy Associates.

“Solicitors aren’t Daleks. We have ethical and professional obligations. We’re not permitted to act for an obvious fraud and threaten people who call out the fraud,” said TPA founder Dan Neidle.

The lawyer in question – Claire Gill of Carter-Ruck – denies any wrongdoing, and Carter-Ruck has promised to mount a vigorous defence. Still, hopefully this will encourage lawyers to be more diligent in checking the bona fides of their clients.

THIEVING OLIGARCHS

I’m sure many of the readers of this newsletter have read Richard Wilkinson’s and Kate Pickett’s ‘The Spirit Level’, published in 2009, with its thorough and convincing analysis of why inequality is bad for individuals and societies. I remember reading it at the time and thinking it could change the world but sadly that does not seem to have happened.

Now Pickett is back with a series of blogs for the London School of Economics, starting with powerful posts on the environment, and health. There’s so much to think about in the global debate around oligarchy, and it’s easy to forget that it’s all about ordinary people’s lives, and how they are stunted when others cheat them of what should be theirs.

“The picture is as tragic as it is clear regarding the gap between rich and poor and how this connects with myriad physical and mental health conditions,” she writes. “Countries with higher levels of income inequality are associated with higher rates of adult obesity and child overweightness, diabetes, mental illness, asthma, drug use and infant mortality.”

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

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A crypto-fueled crash, how blockchain blunts sanctions & MBS’ folly

Oliver Bullough — Wed, 06 Aug 2025 12:56:42 +0000

There are now several books about the 2007-8 financial crisis, the best of which, in my opinion, is Adam Tooze’s ‘Crashed’. But the one that everyone remembers is Michael Lewis’s ‘The Big Short’, later made into a movie starring Christian Bale, Ryan Gosling, Steve Carell and Brad Pitt. Its narrative of misfits spotting the mistake everyone else was making is pleasing and elegant, so it’s easy to see why it’s so popular.

Sadly, however, it’s completely wrong: bankers didn’t sell insanely risky financial instruments because they misunderstood them, but because the trade was profitable, and they didn’t care if they might blow up the world.

And this brings me to some recent headlines in the FT – “Companies load up on niche crypto tokens to boost share prices” and “Crypto lenders dial up risk with ‘microfinance on steroids’” – which have very strong pre-2007 energy. Anyone with a brain knows this will end up in disaster, but folks with money want to keep dancing while the music plays, particularly as the United States has cranked up the volume.

“When President Trump took office in January, he promised to make America the ‘crypto capital of the world’. Today, the President’s Working Group on Digital Asset Markets is releasing a report that provides a roadmap to make that promise a reality,” pledged the White House last week in a new strategy document

Perhaps the idiocy of this strategy can be best understood by pointing out its reference to “Operation Choke Point 2.0”, a confected scandal named after another confected scandal. The reason banks denied services to crypto companies is because cryptocurrencies are frequently used to enable, commit and spread financial crime, so it was an entirely sensible decision. And yet here’s the White House repeating the branding dreamt up by lobbyists to claim it was some kind of campaign against free speech. Crypto, of course, being the answer to the alleged erosion of freedoms.

The crypto boom may in fact be worse than the mortgage-backed feeding frenzy that preceded 2007-8, because the technology is not just setting us up for a new crash but freeing civilisation’s enemies from the few checks upon them.

Boosting fraud with blockchain

Back in May, FinCEN designated Cambodia’s Huione group as being of “Primary Money Laundering Concern”, to reflect its role as the epicentre of fraud in Southeast Asia. Once upon a time, a designation like that was enough to kill a dirty bank (such as Latvia’s ABLV). But for a marketplace that lives on Telegram and trades on the blockchain, it appears to make little or no difference. “Transaction data shows no meaningful decline. In fact, our data shows continued or even increased activity,” concluded Chainalysis about Huione’s fortunes.

Meanwhile, the rouble-denominated stablecoin A7A5 is transferring more than a billion dollars’ worth of value a day, in what is becoming a magnificently successful sanctions evasion scheme that dodges any possible controls. And that’s before we come onto the “coin swap services” that allow criminals to move value around without encountering any responsible nodes in the crypto system at all.

“A sizable proportion of the $3.6 billion in illicit and high-risk funds flowing through coin swap services originates from darknet markets, ransomware, credit card fraud, hacks, Russian military fundraisers operating in Ukraine, and online gambling. A significant proportion also relates to sanctioned activity, including North Korean money laundering,” notes Elliptic.

When I was in Washington DC a few months ago I had several troubling conversations with crypto people, who were distinguished above all by their complete refusal to accept the existence of any downsides to the spread of blockchain technology, or any benefits to the traditional financial architecture based around banks it would replace. I am, as anyone who has read my books will know, no fan of banks but governments are really going to miss the ability to monitor, control and block the movement of money when it’s gone.

Sanctions overreach

Of course, the uneasy secret underlying most anti-money laundering policy is the amount of discretion it gives governments to poke around in our private lives, and how little right we have to appeal against it (this is what the original Operation Choke Point,, and the frustration around it, was about). We are therefore rather dependent on politicians not abusing these powers for their own ends. Which is unfortunate in the circumstances.

“Alexandre de Moraes has taken it upon himself to be judge and jury in an unlawful witch hunt against U.S. and Brazilian citizens and companies,” said Secretary of the Treasury Scott Bessent, in a statement announcing sanctions against the Brazilian judge who’s investigating former President Jair Bolsonaro on charges of attempting a coup.

There is a grotesque irony in the fact that these misguided sanctions are being enacted using the Sergei Magnitsky Act, which is intended to punish corruption and human rights abuses. Perhaps the lesson we need to learn is that there needs to be better oversight of all the powers we give to our governments.

Considering the decades-long disastrous consequences caused by well-intentioned but badly-designed anti-money-laundering policies – not least the wholesale exclusion of Muslim charities from the banking system – this could end up being a good thing. Just looking for a silver lining here.

A dystopic dream dies?

I was listening to ‘In the Studio’, the excellent BBC podcast, when what should pop up but an episode on Neom, the ridiculous linear city concept apparently inspired by the 1997 Bruce Willis movie ‘The Fifth Element’, though without the punkish charm. In case you haven’t heard of Neom, it’s “an experiment in urban living”, which will extend two parallel lines of mirrored skyscrapers across 100 miles of Saudi desert, an idea so hellish that even JG Ballard would surely reject it out of hand.

Anyway, it appears the government in Riyadh has realised that spending a trillion dollars or more on some architectural fever dream might be a bad idea. “They’re finally starting to make financially sound decisions,” a consultant told CNBC.

I have been slightly obsessed with Neom for a while, and my (least) favourite bit is always when the architects wax lyrical about Mohamed bin Salman – the delicacy of his vision, the profundity of his understanding – and then clam up as soon as someone asks whether it’s right for his government to sentence people to death for resisting eviction from their ancestral homes so this horrific new city can be built.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

The post A crypto-fueled crash, how blockchain blunts sanctions & MBS’ folly appeared first on Coda Story.

Ukraine clamps down on anti-corruption activists

Oliver Bullough — Wed, 23 Jul 2025 12:57:20 +0000

No one becomes an anti-corruption activist to make money, least of all in Ukraine. When I first met the co-founders of the Anti-Corruption Action Center – Vitaliy Shabunin and Daria Kaleniuk – back in 2014, they were already veterans of state persecution, and have become only more experienced in the decade since.

AntAC has pioneered and pushed through many of the reforms that have helped Ukraine to become more transparent and less corrupt, leading to the creation of new courts, new laws, new law enforcement agencies, and much more. And this is why it is so alarming that Shabunin has been arrested and his home searched, on the transparently absurd premise that he was dodging military service, while he was following an order from his superior officers to be seconded to the National Agency for Corruption Prevention.

“We strongly believe that, in addition to illegal persecution, these searches are an attempt by the authorities to obtain information about the Anti-Corruption Action Centre’s activities,” said the AntAC. “The goal is simple – to undermine our activities aimed at exposing government corruption.”

It is easy to condemn corruption by your opponents, but sadly easy to excuse it in your friends, particularly in wartime. AntAC’s consistent refusal to go easy on anyone – for example, over the government’s recent refusal to follow the law over the leadership of the Economic Security Bureau of Ukraine – has won it many enemies, but even its critics recognise how central it has been to Ukraine’s democratic development.

“The actions of the pre-trial investigation bodies can be considered either as complete incompetence of officials and unsuitability for their positions, or as a deliberate attack aimed at putting pressure on Vitaliy Shabunin, who continued to criticise the work of state bodies while serving in the military,” said 90 Ukrainian NGOs in a joint statement.

Western foreign officials need to raise Shabunin’s case with their Ukrainian counterparts and continue raising it until this case is dropped. If Ukraine wants to keep receiving support as a democracy fighting a dictatorship, it needs to keep acting like a democracy, and that means its leaders being willing to hear things they don’t want to hear.

THE U.S., A CRYPTO-POWERED TAX HAVEN?

So the European Union’s Anti-Money Laundering Authority is up and running, and one of its first acts has been to warn about the risk posted by cryptocurrencies in its 2025 work programme. Bruna Szego, AMLA’s chair, added that national regulators need to regulate crypto companies as stringently as they do anything else, and that big crypto companies were likely to be among the 40 institutions that AMLA will directly supervise, along with the continent’s largest banks.

The view from the UK is similar. “The risk of money laundering through cryptoassets has increased significantly since 2020 with cryptoassets increasingly appearing in money laundering intelligence over this period. Cryptoassets are increasingly used for laundering all forms of proceeds of crime,” states the country’s newly-published money laundering risk assessment. “The international nature of the blockchain and cryptoasset transactions present unique difficulties in conducting effective enforcement against criminal actors.”

For anyone with a passing acquaintance with money laundering, all of this is completely non-contentious. However, it is hard to square this caution with what’s happening in the United States. Trump’s own crypto company is expanding its business, U.S. regulators are now cool with retirement accounts holding crypto, and yet another big crypto firm is looking to sell shares on the stock exchange. The technology’s boosters are feeling confident, and presenting blockchain as central to national security.

I see cryptocurrencies as near perfect tools for criminals and tycoons to escape the rules democracies put in place to prevent them from owning everything and bribing everyone. But I can also appreciate the artistry of the efforts of the Digital Chamber to boost its members’ business interests by arguing that they’re for the good of the United States and therefore for the good of humanity (for are those two causes not one and the same?).

“It is TDC’s position that blockchain technology supports global economic freedom by empowering those who resist tyranny around the world,” said the Chamber, one of the biggest crypto lobbyists in Washington, DC.

I don’t know what’s worse: that people say this stuff without believing it, or that they actually believe it. Being able to move money in secret may theoretically empower everyone, but in reality it disproportionately empowers already rich people. The U.S. is turning itself into a blockchain-powered tax haven at any incredible rate. Cartels, kleptocrats, oligarchs, spies, plutocrats, these are the real long-term beneficiaries from cryptocurrencies, and if we don’t realise that soon then the rest of us will pay a heavy price for Washington’s capitulation to their lobbyists.

THE U.K., TWO STEPS FORWARD, ONE STEP BACK

Britain, meanwhile, continues its inch-by-inch progress towards a less dirty financial system. It has dissolved 11,500 companies that did not abide by newer, more stringent rules around transparency, closed three company formation agents, and barred several people from working in corporate formation again. For those of us used to how appallingly lax things used to be, this is all rather good to see, if hard to believe (they do, after all, have previous when it comes to boasting about things they shouldn’t be proud of).

The government is planning a summit on countering illicit finance which, coupled with a surprisingly good-looking series of proposals for getting dark money out of politics, feels weirdly hopeful for a country with a tendency to err on the side of letting dirty cash go wherever it likes. I anticipate that counterbalancing bad news will be along next week.

Still, while I’m being optimistic, I’ll give a shout out to The Latimer Network, which brings together experts and practitioners in countering illicit finance from the U.K. and beyond, with the aim of improving how that is done. One of its particular focuses is on trying to think of a better way of identifying money laundering than the current workhorse: the Suspicious Activity Report (SAR).

Tens of millions of SARs are filed globally each year, supposedly to alert the authorities to transactions that look dodgy. That is far too many to read, and most of them are valueless anyway, and it would be great to come up with a better way of monitoring transactions, so that criminals are excluded from the financial system. And don’t tell me it’s blockchain.

However, if you’d like an insight into some of the problems facing the British government, here’s a piece I wrote on the absolute disaster that is the national water system. You wouldn’t have thought you could mess up the water supply in a country where it rains so much, and yet, here we are.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

The post Ukraine clamps down on anti-corruption activists appeared first on Coda Story.

Lawless in Saipan, and Trump pardons crypto bros

Oliver Bullough — Wed, 09 Apr 2025 12:48:37 +0000

I visited the Commonwealth of the Northern Mariana Islands a couple of years ago, intrigued by its curious bad luck in repeatedly being struck by massive gaming and money laundering scandals, like this one and this one. In case you’re not au fait with the CNMI, it’s a US territory north of Guam, which is best known as the place the Enola Gay and the Bockscar departed from on their way to drop atomic bombs on Hiroshima and Nagasaki.

It's also the current home of Jim Kingman, a Texan lawyer who was invited to the commonwealth in 2023 to act as special prosecutor in a baroque corruption scandal featuring former ex-Governor Ralph Torres, who had been acquitted along party lines in impeachment proceedings in the islands’ senate the year before.

A LESSON FROM SAIPAN

And for Kingman, it’s been basically downhill from there. His attempts to investigate, subpoena or prosecute have been frustrated at every turn by a local elite that’s decided it doesn’t really want him to make any progress. “Where are the feds? Where is the oversight? Where are the ethics committees? Where is the bar? What are we even doing out here?” he asked in a fed-up Facebook post, a year into the corruption trial, with almost no progress made.

With the change in government in Washington, DC, Kingman is clearly concerned about the future of his mission on the islands, and has given an interview to a local journalist who also described the sheer extent of obstruction that Kingman has faced. It’s a bitter read, but it has a defiant tone, a commitment to fighting corruption, that leaves an optimistic aftertaste.

“One promise that I can make is that I won’t quit,” Kingman said. “I can’t promise the desired results in a process I don’t have control over. There is a fundamental change that needs to happen to set up a more sustainable government and that will have to come from the people here. The forces that I have been facing have made it clear that these changes will not be received from an outsider.”

Kingman is just doing his job as a lawyer, but the reason I single him out is that he’s looking pretty unusual among American lawyers at the moment. Faced with hostile politicians, Kingman is choosing to fight. Far better paid, better networked and more powerful lawyers than him are choosing to take a different route and roll over when threatened.

I’m glad Kingman is sticking to his principles, and wish him luck. If anyone hasn’t read about what Pakistani lawyers did over a decade ago to preserve judicial independence in the face of an interfering autocrat, I highly recommend this piece. Faced with far tougher circumstances than those confronting New York’s white-shoe firms, Pakistan’s lawyers and judges took their struggle to the streets and found that most people are sympathetic to the idea of an independent judiciary that can act as a constraint on a dictatorial, power-hungry executive.

SLOW PROGRESS

Of course, lawyers can take to the streets. But the authorities’ chronic neglect of offices that investigate and prosecute corruption and financial crime has critically hampered their effectiveness.

The U.K. non-profit “Spotlight on Corruption” has produced a really useful dashboard to track how the British authorities have fared in their efforts against financial crime. Long story short – it’s been pretty bad. If anyone needed proof that underfunding investigative agencies for years and years was an ineffective way to tackle complex criminality, then here it is.

And more evidence has been provided by Transparency International UK’s Ben Cowdock who has produced a fascinating summary of the progress the British authorities are making in reforming its corporate registry. Long story short – it’s not going very quickly.

With an assessment by the Financial Action Task Force (FATF) on the horizon, the “pressure is on to get Companies House reform right,” Cowdock notes. The FATF sets international standards for tackling money laundering and runs mutual assessments of its members on a regular timetable, and the UK is due to be assessed in December 2027. Before that, however, in February 2026, will be the assessment of the United States and there could be fireworks.

MADE EVEN SLOWER

Donald Trump has just pardoned a corporation for the first time. He decided to cancel the judgement against the founders of a crypto trading company that was fined $100 million last year. Authorities said the fine reflected the expectation that the digital assets industry “takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance.” But Trump appears to have given up on enforcing corporate transparency, which is a central pillar of the FATF’s approach to tackling illicit finance.

“What the getaway car is to a bank heist, the anonymous company often is to a fraud scheme,” said Transparency International U.S. in this useful factsheet of cases in which American shell companies have enabled fraud and financial crime. The Trump administration’s response to this has been to not only do nothing, but to stop what was already being done. There has not yet been a time when the American government has so egregiously flouted the FATF’s core principles. And the U.S. was central to crafting FATF back in the late 1980s, so we are drifting into uncharted and rocky waters. It's hard to imagine the FATF approving of what’s happening, and harder to imagine this White House reacting well to being criticised, so you’d hope the FATF is preparing for the fallout.

If it is, however, it’s not showing any sign of being ready for battle. Its most recent publication is almost aggressively dull. And the latest public pronouncement from its president suggests that, while she might have some thoughts about the arrangement of the deckchairs, she’s not got much to say about the iceberg up ahead.

I am personally not a huge fan of the FATF, which has been very good at producing documents and very bad at stopping money laundering. In fact, I sometimes wonder if money laundering experts aren’t the modern day equivalent of the self-perpetuating lawyers lampooned by Charles Dickens in “Bleak House”. “The one great principle of the English law is,” Dickens wrote, “to make business for itself.” Still, we might find we’ll miss the FATF if it’s gone.

AND FINALLY, WHAT IS A KLEPTOCRACY?

I was in Oxford last Thursday to chair an event for Professor John Heathershaw and Tom Mayne, two of the authors of Indulging Kleptocracy, a book about how British professionals have helped foreign thieves and crooks to steal, keep, protect and spend their fortunes. The week before I was in Washington and had lunch with Jodi Vittori, professor at Georgetown University, and author of this recent piece in Foreign Policy headlined “Is America a kleptocracy?”.

These are noted experts on kleptocracy, with lots of very interesting things to say, but they have different definitions of what the word means. In the U.K., Heathershaw and Mayne use it to describe the multinational networks that allow corrupt officials to steal money from places like Nigeria or Kazakhstan, launder it offshore, and spend it in London, the French Riviera or Miami. In the United States, however, Vittori and Casey Michel use it to describe a system of government (like a corrupt version of autocracy, democracy or any other -cracy).

I think these two definitions are the sign of something quite interesting. The United States has so much diversity in terms of how wealth is treated between individual states that crooks and thieves are able to build a kleptocracy within just one country. And the task just became easier, with a specialized team at the Justice Department investigating kleptocrats’ deals and assets now deemed unnecessary by the Trump administration. Not entirely surprisingly, the team’s investigations had irritated some of Trump’s closest advisors and allies.

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

The post Lawless in Saipan, and Trump pardons crypto bros appeared first on Coda Story.

A crypto government for a crypto nation

Oliver Bullough — Wed, 02 Apr 2025 14:27:12 +0000

Last week I attended a crypto conference in Washington, D.C., and can report back that things are changing fast. New regulations look certain to come through in a hurry and – judging by the heinous quantity of lawyers in the venue – a lot of people are very serious about making a lot of money from them. This is, in my opinion, not good.

Crypto people complained bitterly under the Biden administration that regulators were treating them unfairly, by restricting their ability to do business. Many observers pointed out that crypto people were being regulated exactly the same way as everyone else, and that the reason they were struggling was that their product only makes money if it can break the rules, but the crypto people didn’t agree and responded by spending over $119 million on political donations before the 2024 elections.

MONEY WELL SPENT

The lobbying has paid off. Victorious (and well-funded) Republicans have responded to the crypto industry with a degree of enthusiasm that is positively overwhelming. Supposedly dead under the Biden administration, crypto has been brought back to rude health. “I'm so excited for all of us,” said House Majority Whip Tom Emmer. “This has been a long road to get here. We are on the precipice of actually making this happen. And guess what? That's only the beginning.”

He said Congressmen and senators were determined to get a bill onto President Trump’s desk by August that would regulate the stablecoin industry, thus providing the kind of legal certainty that would allow these “digital dollars” to explode even more dramatically than they already have. A lot of this will be overseen by the Office for the Comptroller of the Currency, which has already moved to scrap the cautious approach of the old days (i.e. last year).

“I’m creating a bright future for banks in America to use digital assets. Financial inclusion is the civil rights issue of our generation,” Rodney Hood, Acting Comptroller of the Currency, told a side session at the conference. “I have removed the sword of Damocles that was hanging over the head of the financial services industry.”

Millions of people lack bank accounts in the United States, and they are overwhelmingly the poorest members of society. Governments have failed to do enough to make sure everyone has access to financial services. And if crypto really could help vulnerable people access banking, then I’d be all for it, but I fear – certainly on the evidence of what I saw last week – it won’t.

Perhaps the most alarming discussion was that concerning World Liberty Financial, the Trump family’s own crypto firm. Donald Trump Jr., beamed in by videolink, appeared to be seated on what looked like a white throne. He loomed over the stage like a permatanned deity in an inadequately-buttoned shirt. He explained that he’d only realised the power of crypto after his father had come out as a Republican and the family had all been cancelled. “You put that little R next to your name,” he said, explaining the need for crypto. “And I sort of realized very quickly just how much discrimination there is in the ordinary financial markets.”

The other three founders of the firm, which was created last year, all took to the stage in person. Zachary Witkoff – the son of President Trump’s special envoy tasked with helping to negotiate a ceasefire in Ukraine – spells blockchain wrong on his LinkedIn bio, and got the dress code wrong by wearing a suit and neglecting to grow a beard. Zachary Folkman, who once ran a company called ‘Date Hotter Girls’, wore a bomber jacket and facial hair, which matched the mood more precisely. Chase Herro was the most hirsute and casual of the lot, in joggers and a white baseball cap, and he explained that they would be targeting ordinary Americans, with the aim of getting them to use crypto to buy ham sandwiches from a bodega, as well as aiming to transform the cross-border payments system with their own stablecoin – USD1.

The idea that these four nepo man-babies would be given the keys to any kind of financial institution was alarming, but the prospect of them doing so under permissive new regulations and an administration headed by one of their dads, was terrifying. “So one of our biggest goals is to kind of bring everybody back together and realize that this is a free market and, like, let the free market dictate who survives and who doesn't, and who thrives and who doesn't,” said Herro. Trump’s sons, incidentally, have also just invested heavily in a bitcoin mining company.

WELCOME BACK, ALL IS FORGIVEN

The pace at the conference was frenetic, and every other session seemed to have Congressmen and/or senators explaining how cryptocurrencies would do their bit to make America prosperous and grand. Even three Democrats held a side session called “keeping crypto non-partisan”. No one was listening, though, partly because all the lawyers were talking to each other in the hallway but mainly because the Republican chairs of the Senate and the House banking committees were on the main stage at the same time explaining how America would remain the world’s crypto capital.

Crypto is Trump’s project now, and no one cares what the Democrats have to say. If you want to see how much the industry has embraced the president’s talking points, check out this comically politicized advert from the blockchain company Solana, home of the $Trump memecoin. Even on X, the backlash was so fierce that Solana had to delete it.

What does this mean for the rest of the world though? American politicians seem to have decided that cryptocurrencies – and, particularly, dollar-denominated stablecoins – are good for America, that they bring business to the country, and help find customers for the Treasury’s debt. Anything that gets in the way of crypto therefore is bad for America. With great power comes great opportunity, as Peter Parker’s Uncle Ben might have said if only he’d had more donations from a pro-crypto SuperPAC.

Bo Hines, the hatchet-faced head of Trump’s council of crypto advisers, said his message to any crypto people working offshore was: “welcome home”.

As for Tom Emmer, even the prosecution of the founders of Tornado Cash – the software that, prosecutors say, allowed criminals including North Korean hackers to hide $1 billion of stolen wealth – was governmental overreach. “We need all that innovation, all those risk takers and creators in this country, that's what is the definition of success. From that you'll get that economic growth,” Emmer said.

There is a terrible irony that cryptocurrencies – an idea much of whose popularity stemmed from the public anger sparked by the deregulation and greed that caused the great financial crisis of 2007-2008 – are becoming a new nexus for deregulation and greed. And I worry about what the backlash will bring when this too collapses. And I worry about all the bad behaviour that will be enabled before the collapse happens.

As Corey Frayer, who served in the Securities and Exchange Commission under Joe Biden, once said: “Crypto is a machine where fraud and money laundering go in one side, and political donations come out the other end.”

A version of this story was published in this week’s Oligarchy newsletter. Sign up here.

The post A crypto government for a crypto nation appeared first on Coda Story.

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