CRIMINAL CRYPTO CAPITALI$M

Crypto's 'Tornado Cash' fans money laundering fears, may be 'tip of the iceberg'

David Hollerith

·Senior Reporter

Sun, 30 January 2022,

On January 17th, with cryptocurrency prices being widely routed by risk aversion, Crypto.com flagged a "security incident" that caused the operation to freeze withdrawals.

Days later, the Singapore-based exchange announced that hackers had stolen at least $15 million worth of Ethereum (ETH) tokens — and potentially as much as $33 million, according to independent estimates — but pledged to reimburse those affected. Crypto.com faulted some accounts for a lack of 2-factor authentication for the breach, but didn't provide many other details.

However, information security specialists and amateur blockchain sleuths on Twitter were already tracing the hacked funds, with almost half pointing to a non-custodial Decentralized Finance (DeFi) mixing service called Tornado Cash. That's where the trail goes cold.

Tornado Cash (TORN), itself a smart contract token, is one of a few legal cryptocurrency mixing (or "tumbling") protocols that can be used to obfuscate transaction history.

It can also wash crypto proceeds in ways that are raising alarm among investors and law enforcement — already grappling with a rise in the sector's illicit activity amid a sharpening debate over how to provide regulatory oversight to the booming digital coin movement.

Experts say blockchain mixing services aren't necessarily illicit, even though hackers use them. While part of the growing crypto ecosystem, mixers offer a handy way for criminals to launder funds without being explicitly classified as money laundering.

Still, in December, hackers used Tornado Cash to wash $196 million of crypto stolen from Bitmart, a crypto exchange. According to Victor Fang, CEO and Founder of blockchain analytics firm Anchain.AI, Tornado Cash uses zero knowledge proof.

"This is advanced cryptography, Turing-awarded work from MIT, the highest award in computer science" explained Fang, who chuckled in awe of the technology underpinning the protocol.

Over the past year, Tornado Cash serviced over $10 billion worth of crypto transaction according to Anchain, with a rising number of criminal cases being managed by Fang's firm involving the protocol.

“Privacy is not criminal but criminals are seeking these privacy solutions. This is the tip of the iceberg, the beginning of the future we’re going to see play out,” he added.

Billions in loot being laundered

Money laundering, especially the digital coin variety, is notoriously difficult to track. The United Nations estimates that around 2-5% of global growth (roughly $2 trillion) gets laundered in fiat currencies each year, but the figure is not regularly updated.

Currently, crypto's market capitalization tops $1.7 trillion, and experts insist crime is a shrinking margin of those flows. However, there's still $8.6 billion in blockchain-based loot getting laundered, according to a report released Wednesday by blockchain analytics company Chainalysis.

The firm previously found that crypto-based crime hit an historical high at $14 billion, but at 0.15% of all sector transactions is relatively low. Chainalysis tracked crypto money laundering over the past year, but did not count funds coming from mixing services as illicit, according to Chainalysis' director of research Kim Grauer.

Yet billions in laundered funds were up 30% in 2021 compare to the prior year, and represent the amount of money sent from a crypto wallet that the firm marked as illicit. Those funds then went to another platform for trading, gambling, DeFi, mixing, or other purposes.

And according to Grauer, tracking illicit flows come only from “multi-decade-long and hard-won investigations” into specific financial firms. The rise of the use of digital ledgers, however, could make it easier, some say.

“We can’t say cryptocurrency is better for fighting crime but there’s no equivalent data set for measuring criminal activity in fiat currencies," Grauer told Yahoo Finance.

Mixing services still represent a slim margin for the destination of illicit crypto funds according to Chainalysis data. Yet based on conversations with compliance officers, Grauer said that customer funds sent from a mixing service can be a “red flag,” with firms receiving a significant amount of funds from mixers.

The "blank check"

A representations of cryptocurrency Ethereum is seen in front of a stock graph and U.S. dollar in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration

While algorithmic tools offer precise data, curbing crypto laundering relies on coordination between law enforcement and private companies, which in the eyes of regulators need improvement.

The DeFi boom has also fed money laundering, with illicit wallet use up from 2% in 2020 to 17% over the past year, reflecting the sector's high rate of theft. Still, crypto exchanges remain the primary method for thieves to wash hot money, with those receiving 47% of total illicit funds tracked over the last year, largely because of scams.

One way to halt illicit crypto flows hinges around blocking, or at least monitoring exit points, out of the cryptocurrency economy that give criminals on- and off-ramps chance to convert their loot into less traceable cash. Increasingly, regulators want to shore up their surveillance and reach at these critical junctures.

Congress is debating a measure that grants the U.S. Treasury broad authority to prohibit or freeze certain digital asset, particularly if they relate to foreign banking institutions, transactions or if "1 or more types of accounts is of primary money laundering concern."

Amid a broad debate about crypto regulation, some market players see the provision as a "blank check" for regulators to muzzle crypto's privacy and commerce benefits. Two of the largest cryptocurrency exchanges, FTX and Binance, both qualify as foreign banking institutions though they both have U.S. subsidiaries. In theory. they could run afoul of Treasury's interpretation of that statute, some argue.

If cryptocurrency is ever going to get "traction, there has got to be more regulatory constructs around it," according to David Cass, a former crypto and stablecoin researcher at the Federal Reserve who's now a partner with Law and Forensics, a legal and investigations firm.

The marketing of Tornado Cash and other crypto mixers may affect how regulators "facilitate cooperation with those services, Daniel Garrie, Law and Forensics' co-founder, told Yahoo Finance.

“They can say if you are found to interact or engage with this, you're not allowed to participate in the U.S. banking system, something like that but there are a lot of caveats,” Garrie said.

David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.

Crypto: the Rich and the Criminal Get Richer

Algernon Austin

 March 14, 2025

Facebook

TwitterRedditBlueskyEmail

Photo by Maxim Hopman

Cryptocurrencies help rich, professional investors and criminals become richer. Anyone who does not fall into one of these two categories can easily lose their money gambling on crypto.

A good case study is the $Trump cryptocurrency coin. According to the New York Times, the Trump family and its business partners have made about $100 million (and counting) in fees from the meme crypto coin. One wealthy investor, who bought about $1 million worth of the coin less than two minutes after it was released, made $109 million after selling the coins within two days. This investor may have had insider information about when the $Trump coin was being released. Many other savvy investors, who knew when to dump the coins, also were able to make millions. On the other hand, over 800,000 other investors collectively lost over $2 billion chasing this latest crypto get-rich-quick scheme.

The story was mostly the same for the $Melania (Trump) meme crypto coin. At the time of this writing, the $Trump coin was down 82 percent from its peak. The $Melania coin was down 94 percent. The way to make the most money on the $Melania coin was to purchase it immediately as it was released and then sell it a day later. Apparently, even some wealthy professional investors weren’t fast enough in purchasing and dumping the coin. One investor lost $14 million betting on $Melania, and another lost about $4 million.

Buying a cryptocurrency and then dumping it a day later, of course, is not investing — it’s gambling — and the winners get to take the losers’ money. But it is not a fair game. Wealthy investors who can hype cryptocurrencies and who can spend the resources needed to know the right time to dump them, can make a big profit off less savvy investors. The crypto game is tilted toward funneling money up toward the richer players.

Criminals   Crypto

The Federal Trade Commission reports that cryptocurrency fraud is now one of the leading types of financial crimes. Criminal activity associated with cryptocurrencies is growing rapidly. Chainalysis, a blockchain analytics firm, tallies the value of a wide range of criminal activity involving cryptocurrencies. They include ransomware extortion where payment is required in crypto, people trading illegal drugs and other illegal goods for crypto, the theft of crypto, crypto scams, and other crimes. Chainalysis estimates that in 2020 criminals received $11 billion in cryptocurrencies from illegal activities. Their estimate for 2024 is $51 billion. So far, 2025 looks like it could exceed 2024. In February, $1.5 billion worth in cryptocurrencies was stolen from the Bybit cryptocurrency exchange. This is thelargest theft of cryptocurrency on record.

Chainalysis also notes that the types of criminals using crypto and the types of criminal activity they are engaged in continues to expand. In addition to ransomware and stealing individuals’ crypto, Chainalysis reports that “[a]n array of illicit actors, including transnational organized crime groups, are increasingly leveraging cryptocurrency for traditional crime types, such as drug trafficking, gambling, intellectual property theft, money laundering, human and wildlife trafficking, and violent crime.” It is also more common to find hate groups, including white supremacist and neo-Nazi groups, using cryptocurrencies to fund their activities.

Although cryptocurrencies have a growing presence in the financial exploitation and victimization of the public, the Trump administration is weakening consumer protections. Elon Musk has gravely weakened the Consumer Financial Protection Bureau which used to process thousands of cryptocurrency complaints a year. Musk is also weakening the Federal Trade Commission which also responds to crypto complaints.

There are clear conflicts of interest between the Trump administration and the regulation of the crypto industry. Elon Musk was one of the wealthy investors who hyped the DOGE cryptocurrency inflating its value. Musk has owned DOGE and other cryptocurrencies. His Department of Government Efficiency also known as DOGE is clearly a nod to this crypto.

Donald Trump received tens of millions of dollars for his 2024 presidential campaign from the crypto industry, and he and his family profits financially from the industry. Given these facts, it is perhaps not surprising that the Trump administration would not only restrict the policing of the crypto industry, but enact policies like creating a “Strategic Bitcoin Reserve” that would bolster the industry and his and his family’s profits.

This first appeared on CEPR.

Algernon Austin, a senior research fellow at the Center for Economic and Policy Research, has conducted research and writing on issues of race and racial inequality for over 20 years. His primary focus has been on the intersection of race and the economy. 

Crypto Is Flailing

Donald Trump used the White House to pump crypto to unprecedented highs. It’s still collapsing.

By Hadas Thier

April 5, 2026

Source: Jacobin

It feels like just yesterday when crypto markets last crashed hard. Back in 2022, what had been a wildly careening celebrity- and media-fueled hype train suddenly was a smoldering wreckage. Those were the days of Sam Bankman-Fried’s fraud-riddled FTX exchange, which went belly up along with a slew of other big crypto projects. The price of Bitcoin, the largest and most trend-setting of thousands of cryptocurrencies, dropped from its high of over $64,000 in 2021 to barely hitting $17,000 by 2022’s end. Along with Bitcoin, all things crypto sank.

It felt at the time as though we all awoke from a bizarre collective dream in which mass-produced JPGs of cartoon monkeys had sold for prices that rivaled those of an average home, and trading made-up digital tokens on your phone promised to deliver unthinkable riches for the brave of heart. In the wake of crypto’s crash, most people preferred to tune out anything that included words like “blockchain,” “NFTs,” or “Bitcoin.” Even when prices for crypto recovered in 2024, the cringey backwash of 2022 clung on within mainstream public opinion.

And then came Donald Trump.

Trump returned to the White House with a promise to make crypto great again and the United States “the crypto capital of the world.” The crypto industry, in a coming-of-age moment, lavished the aspiring Bitcoiner in chief and other crypto-friendly candidates with mountains of cash during the 2024 elections, organizing the most aggressive fundraising operation it had marshaled yet. According to Public Citizen, nearly half of corporate contributions in that year’s cycle came from the crypto lobby. On the campaign trail, Trump responded in kind and, as a new crypto convert, pledged to help Bitcoin prices “skyrocket like never before.”

The newly forged Trump and crypto-capitalist alliance paid off handsomely for the industry and, predictably, to the Trump family.As of January, the Trump family fortune grew by more than $1.4 billion from its crypto empire, which crisscrosses the digital markets landscape: from TRUMP and MELANIA “memecoins,” to non-fungible token (NFT) Trump trading cards, to a Bitcoin mining company, to the World Liberty Financial crypto platform (including its own WLFI token and USD1 “stablecoin,” both among the top forty cryptocurrencies by market capitalization)

Using his position as the most powerful (and least accountable) politician in the most powerful nation in the world, Trump made quick work of defanging an already barely regulated industry. The president pardoned high-profile crypto criminals (mostly those that invested in his crypto projects), pushed a series of pro-crypto bills in Congress, and announced the creation of a government Strategic Bitcoin Reserve, while his regulatory appointees dropped every major crypto-related investigation and lawsuit meant to rein in fraud, market manipulation, money laundering, sanctions violations, and other basic securities violations.

With regulatory doors flung wide open, crypto was poised to become mainstream and be adopted by the same financial institutions that the crypto movement once claimed to rebel against. Money was flowing into crypto, and prices were booming. Bitcoin prices peaked at an unthinkable $126,000 last October. The size of the crypto market ballooned from a capitalization of $1.7 trillion at the end of 2023, to $3.5 trillion the following year after Trump’s election. It broke the $4 trillion mark by September of 2025.

But four months later, despite having thrown everything but the kitchen sink to power a crypto boom, the market shrunk back to just over $2 trillion. Bitcoin fell to half its peak and is now fighting to clear the $70,000 mark. Despite no-holds-barred boosting from the world’s most powerful and brazen politician, crypto is flailing. What happened?

What Goes Up Must Come Down

Crypto prices first began their recovery in 2024, before Trump returned to the White House. This was largely because President Joe Biden’s Securities and Exchange Commission (SEC) had already approved of a trendy Wall Street instrument called exchange-traded funds (ETF) to include Bitcoin and another major cryptocurrency, Ether. ETFs are funds run by asset managers like BlackRock or Fidelity that hold a basket of underlying assets. They issue shares of those funds, which track the value of their assets. In the case of Bitcoin and Ether ETFs, investors gain exposure to crypto price movements without having to set up crypto “wallets” and buy the digital assets themselves.

Wall Street loved it. But ordinary Americans were exposed to them, whether or not they knew it. Nearly a dozen US pension funds and at least a couple of state pensions have invested in crypto ETFs, binding the financial health of millions of working people to the volatility of the crypto markets. Crypto ETF growth drove demand for Bitcoin and Ether and pushed the rest of the industry along with them.

Once in office, and with Wall Street’s entanglement with crypto by now growing, Trump intervened to clear the industry’s path “to the moon” through legal legitimization and deregulation. Crypto companies and traditional financial institutions partied like it was 1929.

The Trump-crypto bloc used three major prongs to get there. First, by issuing pardons and throwing out every major lawsuit and investigation, Trump did more than signal to crypto criminals that they need only drop hundreds of millions of dollars to curry his favor. He also signaled to the whole crypto industry that anything goes, and to banks and traditional finance that they can feel free to play in crypto’s murky waters without worrying about legal consequences.

Second, Trump’s SEC reversed course from Biden’s and recently declared that crypto tokens and assets are definitely NOT securities (tradable financial instruments) — and therefore cannot be regulated as such. (Their all caps, not mine.) Defining tokens as securities had been the linchpin of previous attempts to begin to regulate a thoroughly unregulated field. Now reversing this position essentially gave the message that crypto is “not the SEC’s problem.” The rules that apply to the rest of capital markets don’t apply here.

Last, Trump leaned on Republican lawmakers to draw up legislation (allegedly with middle-of-the-night phone calls) — pulled directly from industry white papers and finessed with closed-door meetings with crypto leaders — to “future-proof” the regulatory about-face. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, passed last summer, enshrines the nearly $300 billion worth of crypto stablecoins as legally recognized, privately issued currency, operating with minimal oversight.

The Digital Asset Market Clarity (CLARITY) Act essentially does the same for other cryptocurrencies. It provides carve-outs to crypto tokens, crypto exchanges, crypto advisers, and crypto funds and portfolios from all existing major securities laws. The CLARITY Act is currently being held up while the crypto industry and banking industry fight over how far stablecoins can go. Coinbase CEO Brian Armstrong scuppered negotiations, and after he met with the president, Trump took to Truth Social to berate the bankers as well.

Trump couldn’t take total credit for his midnight calls creating congressional compliance. According to FinTech Weekly, “Seven of the forty-six senators currently sitting on the two Senate committees with direct control over the CLARITY Act received a combined $265,500 in direct contributions from individuals employed at or affiliated with crypto companies during the 2025-2026 cycle,” including the CEOs of Coinbase, Ripple, Kraken, and founders of Blackstone.

This all pales in comparison, though, to the money poured in by Fairshake, the crypto super PAC, which has already spent an unprecedented $271 million on the 2026 midterm elections — delivering a not-subtle message to legislators about what will happen if they don’t toe the crypto line.

And yet, with all the might of the White House and billionaire crypto capitalists flexing, the markets are flailing.

The increased participation of traditional finance turned out to be a double-edged sword. Just as quickly as investor cash can flow into the market, it can flow out. And institutional investors, at first sign of market retreat, always dump their riskiest assets (i.e., crypto) first. Beginning last fall, a combination of fears of tightening Fed rates, Trump’s tariff shocks, and war with Iran spooked Wall Street. In early February, investors yanked roughly a billion dollars from ETF funds in one week alone.

The sudden collapse undermined the crypto narrative that it was on an unstoppable flight to the moon, and that Bitcoin in particular was like a “digital gold.” Maja Vujinovic, CEO of digital assets at FG Nexus, told CNBC: ”[The] straight line bull run that a lot of people expected hasn’t really materialized yet. Bitcoin isn’t trading on hype anymore; the story has lost a bit of that plot. It is trading on pure liquidity and capital flows.”

In other words, gone are the days when celebrities could be counted on to whip up extra hype every time the market flags. The crypto market, instead, is dependent on institutional capital flows.

But outside of crypto’s extreme price cycles lies a more long-term and dangerous consequence. The partnership between Trump and the crypto industry is not just one of extreme moneymaking and grift (although it is both). The alliance more dangerously solidified a power bloc of anarchocapitalists, Silicon Valley venture capitalists, and Trump’s burgeoning authoritarian state. Crypto creates easy avenues for that alliance to grow in opaque ways, with the president’s sundry crypto projects giving any criminal or foreign interest that cares to invest in them special access to the president.

That bloc is legitimizing a parallel, almost completely unregulated, financial ecosystem, even more shadowy than Wall Street’s current very shadowy banking system. That legitimacy has the potential to create an even greater proliferation of stablecoins, holding billions — perhaps trillions — of Treasury securities to back their reserves. If those stablecoins collapse, as unregulated financial bodies in particular have a habit of doing, their issuers would need to to sell off high volumes of securities, destabilizing markets.

If the crypto market continues to collapse, Wall Street and their political cronies will lose interest, and the shadowy ecosystem will idle, at least for the time being. But even so, as long as the legislation and regulatory capture continues, crypto will use the new legal framework currently being put in place and pick up where it left off if at the next wild boom.Email

Hadas Thier

Hadas Thier is a writer, journalist, and activist based in Brooklyn, N.Y. She is the author of A People’s Guide to Capitalism: An Introduction to Marxist Economics.