I am fascinated, terrified and compelled by the continually unfolding story of the “missing crypto queen” Dr. Ruja Ignatova as told by the outstanding Jamie Bartlett in his book on the same, based on his BBC podcast series (which, and I cannot stress this enough, is a must-listen). When Jamie’s book was released earlier this year, the BBC quoted me, kindly labelling me “crypto author”, saying that “Getting rid of a few billion dollars’ worth is much harder than you think” which was an accurate precis of my opinion.
If you don’t know the story, it is about a massive Ponzi scam called OneCoin. I urge you to listen to every minute of every episode, even the ones that are very hard to listen to when you hear from people who have lost their life savings to the scam. Several billion euros were slurped up in the scam and are now unaccounted for.
(And when you listen to these tales or people being taken in by the scam, don’t harden your heart and go all caveat emptor on their asses. It could, and does, happen to anyone. Steve Wozniak, the co-founder of Apple and a tech god, got taken for seven Bitcoins in a scam.)
There is a fair bit of money laundering going on in “crypto”, of course. The BBC quoted Chainalysis, saying that criminals laundered almost nine billion dollars worth of cryptocurrency in 2021, up around a third on the previous year. They also said that money from offline crime, such as cash from drug trafficking, converted into cryptocurrency to be laundered is not included, and this could be something of a growth area, so it is reasonable to observe that billions of naughty dollars are sloshing around the blockchain.
But why? If you are trying to move a few hundred big ones maybe the blockchain is a good. But as to my point to the BBC, when a few billion starts to shift from here to there, companies such Chainalysis and Elliptic are on it. It is really, really difficult (considerably more than Ozark-level difficult) to sneak the big money under the radar.
Consider the wonderful story of the couple in New York — Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31 — who were arrested trying to launder several billion dollars worth of Bitcoin. The husband and wife team (who I guarantee you will be the centre of a Netflix mini-series) were arrested by the FBI for consipiring to launder cryptocurrency stolen from the 2016 hack of virtual currency exchange Bitfinex. The Feds seized over $3.6 billion in cryptocurrency tied to the hack.
The media (and, I have to say, me) were fascinated by Heather Morgan’s rapper persona, Razzlekhan. She was on various social media platforms and made music videos for YouTube. She even wrote blog posts for Forbes! I’m not expert on the genre but I looked at a couple of her music videos and they weren’t very good. In fact, the only thing that she is worse at than rapping is money laundering, since while the Feds had spent years steadily tracking theproceeds of the Bitfinex hack, what in the end led them to kick down the door of the couple’s Wall Street apartment was the $500 Walmart gift card that Ms. Morgan had ordered and when the cops searched the apartment, they found fake passports, burner phones (apparently in an envelope marked “burner phones”) and $40,000 in cash.
(Pro-tip: Never put the burner phones in an envelope marked “burner phones”, that’s the first the Feds look for.)
(I’ve read the Chainalysis report and it further points out that of the estimated $14 billion in criminal proceeds that ended up in cryptocurrency last year, most of it ends up at a “surprisingly small” group of purpose-built money laundering services.)
Snippings 