Changjiang Currency Exchange, a money transmitter in Australia, has been busted in a 230 million Australian Dollars money laundering Scandal. Through the investigation, the Australian Federal Police (AFP) discovered “The largest and most sophisticated money laundering gang in Australia”, which is involved in cybercrime, drug trafficking, cryptocurrency and violent crime. The Australian Financial Review reported that Australia’s four major banks and Bendigo Bank were also involved in the case. Some Employees of these banks unknowingly facilitated the gang’s criminal activities.
AFP investigative Service Commander Kerry Ferry said the group of defendants behind the scam allegedly deceived victims into thinking they were receiving a high return on their investment. “Most of the funds deposited into the Australian bank accounts or remitted by Yangtze Exchange are related to developing an investment application called MetaTrader and other foreign exchange and cryptocurrency trading platforms”.
Cryptocurrencies, as they stand, offer criminals a wide variety of tools to launder and hide money from illicit operations. In this case, it was used to hide the funds trail by depositing digital assets into various bank accounts across Australia. Another option is something called ‘tumbling’. Tumbling became famous in 2022 with Tornado Cash. Tornado cash was a smart contract token and was one of the few cryptocurrency mixing (Tumbling) protocols that could be used to obfuscate transaction history by effectively ‘tumbling’ a variety of different cryptocurrencies together and redistributing them so their transaction history could not be identified. It is unclear at this time if this tool was used by the accused or not.
This money laundering scandal comes at a time when Australian regulators had recently proposed their “Regulating digital asset platforms” consultation document. This consultation has received criticism because it was simply “Shoehorning” current financial regulation onto the crypto industry, failed to define specific tokens, and focused on the crypto exchanges themselves. The case presented above would seem to be an effective point for the current regulatory position Australia has decided to take. The accused could also be found guilty of operating as an illegal exchange for both traditional and digital assets.
This is just the beginning of Australia’s journey in regulating digital assets, and undoubtedly, future cases and developing precedents will become more illuminating as to the future of crypto in Australia.