A shocking report from TRM Labs recently revealed: from North Korean hackers, Mexican drug gangs, Russian mafia to sophisticated crypto scams on Telegram—all rely on an underground network in China to launder digital money amounting to billions of dollars. This is not just about covert transactions on the blockchain, but a highly sophisticated illegal financial system run by Chinese criminal organizations operating transnationally.
When all paths lead to China
According to #TRMLabs , although crypto is often referred to as a decentralized and uncontrolled tool, most large criminal organizations globally cannot use large-scale digital assets without the underground banking network of China. These unofficial banks—mostly operated by organized crime gangs like triads—specialize in processing crypto cash flows for illegal activities.
Ari Redbord, head of global policy at TRM and a former U.S. Treasury official, believes that the current U.S. policy is 'fragmenting' the crime issue: treating fentanyl as drug crime, North Korea as cybercrime, and crypto scams as isolated scams. According to him, this separate approach prevents the root problem of the money laundering network from China from being thoroughly addressed.
'We need to stop viewing these as individual threats and should see them as threads leading to one: China's underground money laundering system,' Redbord emphasized.
North Korea hacks $1.4 billion—but who is the real money launderer?
The record hack occurred in February this year, when North Korea stole up to $1.4 billion in ETH from the Bybit exchange in just a few seconds. However, according to Nick Carlsen—a senior investigator at TRM and former FBI analyst—this ETH was not laundered by North Korea, but by Chinese intermediaries using services like Thorchain to convert it to Bitcoin before continuing to anonymize it.
Investigators confirm that this is a professional money laundering industry, aimed not only at assisting international criminals but also serving wealthy Chinese individuals looking to transfer money abroad to avoid the financial control of the government.
'If you are Chinese and want to buy a $1 million house in Los Angeles, you will need to rely on these people,' Carlsen said.
Mexican drug cartel relies on USDT... and China
The Sinaloa cartel—one of the largest drug trafficking organizations in Mexico—is operating its activities using stablecoins like USDT, with money laundering support from a Chinese network. If this system is disrupted, it would be a 'fatal blow' to them, Carlsen remarked.
The solution proposed by #TRM is to use proactive attack tactics: if North Korea has the Lazarus Group (the government hacking unit), then the U.S. also needs to have a blockchain attack force to disrupt and undermine China's underground financial activities.
'Do what North Korea is doing, but do it to them,' Carlsen said.
Why is there no solution yet?
TRM believes that the main reason this system continues to operate strongly is because it lies between the processing ranges of many U.S. agencies like the FBI, DEA, and the Treasury Department. This lack of coordination makes transnational money laundering activities difficult to trace or handle effectively.
Additionally, TRM points out that although there are reports suggesting China is 'tightening' its control over crypto activities, the nature of its stringent control system does not prevent underground organizations from developing. 'A dictatorial country with a terrible surveillance capability like China still allows this industry to exist—that says a lot,' Carlsen doubts the real intentions from Beijing.
Crypto, geopolitics, and the challenges for users
From the perspective of Binance users and the crypto community in general, this discovery highlights a concerning reality: the risks within the digital asset ecosystem do not only stem from technology or exchanges, but from the very global money laundering system operating behind the scenes. While countries are still struggling to find legal solutions, networks like Chinese triads continue to serve as the 'backbone' of many illegal activities.
For retail investors, this also serves as a reminder that not all crypto activities are transparent, and funds can sometimes get caught up in global criminal networks if one is not careful.
Risk warning: Investing in cryptocurrency always carries high risks and is not suitable for everyone. The market can be highly volatile due to influences from technology, policy, and other non-financial factors such as money laundering or cybercrime. Users need to be equipped with knowledge and conduct thorough research before participating.
