The UK National Crime Agency (NCA) announced last week it had dismantled a major Russian money laundering operation involving cryptocurrency transactions.
The operation, known as Operation Destabilise, has so far resulted in 84 arrests and the seizure of over £20 million ($25.5 million) in cash and cryptocurrencies.
The investigation also led to sanctions being imposed by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) on several Russian-speaking individuals and four businesses implicated in sanction-evasion activities.
The operation extended beyond the UK, with coordinated efforts taking place across the Middle East, Russia, and South America.
Byron Boston, CEO of the cryptocurrency tracking firm Crypto Track and a former US police officer, commented on the challenges posed by the global nature of cryptocurrency. “Cryptocurrencies often place investigations at the mercy of inconsistent international regulation and cooperation,” Boston told Decrypt.
Boston highlighted the hurdles in tracing laundered funds, citing an example where $1 million in cryptocurrency was tracked but recovery was delayed due to red tape.
“Unfortunately, this is not a quick process, and oftentimes the cryptocurrency is liquidated prior to obtaining mutual legal assistance treaty (MLAT) agreements,” he said.
The operation uncovered two major laundering networks, Smart and TGR, which exploited cryptocurrency to obscure financial trails. Criminals reportedly used over-the-counter (OTC) trading desks to convert cash into cryptocurrency and vice versa, making it harder to trace illicit transactions.
Slava Demchuk, CEO of the crypto compliance firm AMLBot, explained the tactics: “By using OTC trading desks in various jurisdictions, criminals can hop on and off from cash to crypto, obfuscating on-chain traces. Rapid information sharing and prompt sanctioning can mitigate this.”
Investigators observed that the UK had become a significant hub for these operations, with street-level cash transactions frequently followed by cryptocurrency transfers of equivalent value.
Criminal groups then used these funds to reinvest in illicit activities, including the purchase of drugs and firearms, bypassing the need to physically move cash across borders.
Meanwhile, a US Fifth Circuit Court ruling marked a significant moment for privacy advocates in the cryptocurrency space.
The court overturned a prior decision, ruling that immutable smart contracts—autonomous programs that cannot be altered—cannot be classified as “property” under existing sanctions law. This decision could have broad implications for how regulatory agencies address blockchain technology and financial crime in the future.
The NCA’s actions and related investigations underscore the growing role of cryptocurrency in global money laundering schemes.
By targeting these networks, authorities aim to disrupt the financial infrastructure enabling cross-border criminal activities. However, experts warn that effective international cooperation and swift information sharing remain critical in combating the evolving tactics of money launderers in the digital age.
