David Kushner first met Anthony Curcio nearly two decades ago, to tell the story of how Curcio masterminded a $400,000 bank robbery and escaped on an inner tube. His latest on Curcio is every bit as outlandish: After his release from federal prison, Curcio waded deep into the trading card industry, dealing in top-rated Michael Jordan and Nolan Ryan cards and coming under scrutiny for suspected fraud. Curcio contends that the real villain is Collectors Holdings, a private company that owns Professional Sports Authenticator, which evaluates and assigns value to trading cards. A thrilling piece of reporting about authenticity—as an idea, a value, and maybe even a front.
Three months later, on the early morning of May 23, 2024, Curcio was walking through his neighborhood in Redmond. It was quiet — what he called “raccoon hours.” Then he heard cars coming up behind him. FBI agents stormed him, guns drawn; he counted around 20. “What the fuck is this about?” he said. “You’re here for sports cards?” He told them about the judgment he’d just won against Captain Ticket. They said they knew all about it.
The United States is inching closer to passing a gigantic piece of legislation to put cryptocurrencies on a secure footing, with the bill emerging unscathed from the Senate’s banking committee. Opinions differ as to what this means: crypto people are thrilled, while anyone who knows about money laundering is terrified. Passage of the so-called CLARITY bill has been a key goal of crypto enthusiasts since Donald Trump came to power, since it would give them the legal certainty to engage in “financial innovation” without worrying about a return to the Biden-era policy of trying to regulate them as if they were normal people.
Committee chairman Tim Scott is delighted: “For me, this is personal. My mother raised my brother and me with faith, grit, and determination, and she taught me that the American Dream should be within reach for every family, including single mothers working hard to build a better life for their children.”
I quote Scott partly because it’s such a weird justification for passing crypto regulation (or perhaps he just says that sort of thing about literally everything he ever does?), but mainly because it’s pretty clear that the bill as it stands will be a disaster for the kind of vulnerable people he claims to be fighting for.
In a sign of experts’ concerns, Transparency International’s U.S. office put out a statement quoting nearly all the most respected voices on money laundering in America arguing that the bill needs better safeguards against dirty money. “At a time when we know that hostile actors like (Iran’s Revolutionary Guards) are looking to circumvent U.S. sanctions to rearm and threaten Americans and U.S. interests around the world, it is inconceivable to me that we would open new, effective channels for sanctions evasion,” said Richard Nephew, former U.S. Coordinator on Global Anti-Corruption and Deputy Special Envoy for Iran.
“Terrorists, violent drug traffickers, and organized criminals who prey upon the elderly and unlearned in increasingly sophisticated financial and AI generated schemes are, quite literally, getting away with murder, funded by untraceable cryptocurrency transactions hidden behind an anonymous block chain,” said former FBI agent Karen Greenaway.
There is an awful lot of money in crypto, and Tether alone now has three people among the richest 100 in the world. Tether’s largest single shareholder Giancarlo Devasini’s wealth has grown from $9.2 billion in 2024 to $89.3 billion now, while chief executive Paolo Ardoino and former CEO Jean-Louis van der Velde have done pretty well too. Though none of them have done quite as well as Changpeng “Binance” Zhao, crypto’s only centibillionaire (so far).
In the UK, there’s a lot of concern about the millions of pounds going from crypto investors to Reform’s Nigel Farage, who has become a crypto champion, no doubt coincidentally. But, wow, look at what’s happening in Alabama for a sign of what the future looks like if crypto people really get their hands on the purse strings and try to buy their way into the Senate.
That much money doesn’t just help supporters win, it also terrifies opponents: standing up to the crypto lobby guarantees you’ll be swamped in hostile advertising. How do you want to be paid, as Pablo Escobar used to say, in silver or lead?
But why should the rest of the world care that this is happening? I’m sure I’m not the only foreigner who’s been staring in bewilderment at the growth of U.S. prediction markets, and how efficiently they allow insiders to monetise their privileged access to inside information. A lot of those markets are barred in other countries, but the U.S. soldier who was arrested for betting on the Maduro capture was trading on polymarket, a crypto-denominated market which is blocked in the United States too, despite Donald Trump Jr. being an investor.
Such restrictions can be easily bypassed by using a Virtual Private Network, so U.S. regulators are using artificial intelligence to track down insider trading on polymarket. After that soldier’s arrest, I suspect Americans will be much more careful about what they do.
Prediction markets claim they don’t want insiders trading on privileged information. But if the markets are to function in a way that supports their founders’ justification for them, as a price signal for future events, they rely on people with knowledge to be using them to make bets and thus to move prices in a useful direction. So clearly the temptation will always be there for anyone with inside information to use it to make some easy money.
And does anyone think U.S. regulators will care about Indians, Brits, South Africans Ukrainians, or other foreigners using crypto to trade on information from their own countries? They after all have a track record of treating foreigners and U.S. citizens differently. That’s why it was Francesca Albanese, with her American husband and daughter, who managed to have sanctions cancelled for daring to investigate Israel’s behaviour in Gaza, whereas non-U.S. connected people have failed to do so.
The new U.S. crypto bill coupled with U.S.-based crypto-denominated prediction markets points towards the United States becoming a gigantic offshore enabler of corruption for the rest of the world; a digital version of what Switzerland was in the analogue years, with everyone else reduced to begging its regulators for assistance.
“Crypto prediction markets are accessible to anyone with an internet connection and a wallet, pooling liquidity from a global user base rather than a regional one,” says Chainalysis. I think they mean that to be a good thing, because the blockchain is transparent and malefactors can be spotted easily yada yada, but it sounds beyond dystopian to me. I’m genuinely a bit terrified of what this will mean for corruption in the next few years, and I haven’t heard of any politicians who are alert to it yet.
A version of this story was published in this week’s Oligarchy newsletter. Sign up here.
Oliver Bullough
Oliver Bullough
Oliver Bullough
The post Crypto’s corrupt American dream appeared first on Coda Story.
Nigel Farage, the leader of the UK’s right-wing Reform UK party, has taken millions of pounds from crypto people, including one convicted of financial crimes in the United States. There are, despite Farage’s insistence to the contrary, questions around whether he followed the rules. Nonetheless, his party has swept local elections. There’s a lesson here for progressive parties everywhere, including in the United States where senators are seeking documents relating to financial ties between the commerce secretary and Tether. What if you get your ‘gotcha’ moment, turn around to the voters with a broad smile… and they vote for your opponents anyway?
Believers in democracy need to start advocating for more transparency, more enforcement and more restrictions on murky finance if they want to stop unaccountable money from buying influence in their countries. It is not enough to rely on journalists and activists to produce the occasional investigation, and expect voters to do the rest: we need properly-resourced agencies that can keep dirty money out of our systems if we want them to remain clean. If history tells us anything, it’s that criminals get elected all too often.
This is urgent. Tether made more than $1 billion in profits this year, in the first quarter, and is thinking hard about the midterms and how candidates might be encouraged to fight for crypto. And that’s just one company. Progressives who believe in fairer finance, a state’s right to regulate its own economy and the power to oversee who’s buying whom, don’t have that kind of money to spend to influence elections, so they need to start making the argument for campaign finance restrictions much more forcefully.
But there’s another point here too. I am working on an article about money laundering at the moment, and was chatting to two UK detectives last week. They led a successful operation in their city (I’ll post the article when it’s done) and I asked if they thought it had made a lasting difference. “With all crime, you take one out and there is another,” one of the detectives told me. “I'd like to think it has made a dent but there will always be more.”
In the case they worked on, gangs were bringing cash generated via the cocaine trade to be laundered into crypto (no prizes for guessing which cryptocurrency they preferred). The detectives identified £53 million in turnover over two years. It’s great that they jailed the ringleaders, but you can see why they’re not getting too carried away. That total is about a quarter of a percent of the UK cocaine market’s turnover, so the gangs really won’t have noticed the loss. And, for the police, it was five years’ work.
To a fairly large extent, since the first U.S. operation in Miami in 1980, when we’ve spoken about fighting dirty money, we have really been talking about stopping cocaine gangs by taking away their ability to make a profit. And, despite occasional successes like the one I’m writing about, this approach has overall been a catastrophic failure. Cocaine is cheaper, more abundant, and more widespread than ever before.
This is important for many reasons, obviously because entrusting the supply of a dangerous substance to criminals is bad, but also because the existence of a vast underground financial system to move the cocaine trade’s profits creates a mechanism through which Russian spies, terrorists and others can hide their cash too. For me though, the real problem is that we have an urgent threat to democracy posed by hidden unaccountable money. Instead of tackling that problem though, our police officers are fighting an endless war against drugs that was lost decades ago.
My modest proposal therefore is to legalise cocaine. It’s available everywhere already, so there’s no downside. We should tax it, regulate it, make sure kids can’t buy it and, as a useful side effect, take all the liquidity out of the underground economy. Our police officers could then stop running to go backwards, and instead fight a battle they might actually win, which is to stop fascists and kleptocrats from buying our democracies.
Here’s a good article from The Economist by “a former senior official in the Russian Government,” arguing that Vladimir Putin is losing his grip. Now, I’m always a little cautious about articles that tell me what I want to hear, as well as the veracity of information and analysis provided by Russian officials, former or current, but it does make some very interesting points.
Of particular interest to me is the idea that Russia’s elite is annoyed with Putin because its members are worried about having their assets stolen, with $60 billion worth of property nationalised or seized by corrupt officials in the last three years.
“Previously their property rights were outsourced to the West. They used London courts, offshore structures and international arbitration to resolve conflicts or seek protection. Now conflicts must be resolved domestically, without functioning institutions. Demand for rules grows more urgent as redistribution of assets gathers pace,” the article states.
One of the reasons why democracy failed in Russia is because the oligarchs were able to keep their wealth offshore, and thus to essentially colonise their own country, secure in the knowledge they were themselves immune from the unfairness. It would be a pleasing irony if the horrific war in Ukraine ended up undermining not just Putin, but Putinism as a whole.
There is a huge opportunity here for Western governments to capitalise on the dissent, and to start quietly offering sanctions relief to Russians willing to break with Putin, and who’re prepared to surrender a decent chunk of their wealth to help Ukraine in return for being able to keep the rest. There aren’t enough police officers to actually bring the cases needed to investigate, prosecute and confiscate the oligarchs’ wealth anyway (see item above), so we may as well start negotiating and see what they’re willing to do to get it back. In short, this is a big week for me making unfashionable policy proposals.
There’s debate in the United States about getting rid of the Corporate Transparency Act, with Jeff Bezos’ Washington Post supporting repeal, even though the law has never actually been implemented. Opaque shell companies are a weird outgrowth of capitalism that corporations’ original inventors — who wanted to create insurance for entrepreneurs, not getaway vehicles for crooks — never intended to happen, so it’s very odd that they’re now being presented as some kind of human right.
If you want a reason why the appallingly lax American system should be cleaned up, here’s a post on X about someone who tasked two AI agents with making money, and came back to find out they’d registered a Wyoming LLC all by themselves. This suggests the opening of a whole new frontier of automated money laundering, and the consequences are frankly pretty terrifying. The Corporate Transparency Act should be strengthened, not abolished.
A version of this story was published in this week’s Oligarchy newsletter. Sign up here.
Oliver Bullough
Oliver Bullough
Oliver Bullough
The post Legalize Cocaine to save democracy appeared first on Coda Story.
Someone recently asked me what mark out of 10 I’d give for the efforts of governments to tackle financial crime. It got me thinking about that one bright spot of recent times — the West’s response to Russia’s full-scale invasion of Ukraine four years ago — and how it is now looking. Back in 2022, a lot of us were pleasantly surprised by the speed and ambition with which Western governments sanctioned the Russian government, state-owned companies and wealthy individuals. While Western pressure did not prevent the war, the asset freezes did impose a real cost on those conducting it. Four years on, however, those sanctions are beginning to look a bit shopsoiled. If they began at 7/10, they’re now scoring a lot lower.
There are reasons for this: Donald Trump does not appear particularly interested in Ukraine; the now former Hungarian prime minister Viktor Orbán has been snarling things up; and so on, as laid out in this analysis from Tom Keatinge. To make things worse, Trump’s latest adventure in Iran has pushed the oil prices sharply higher, earning more money for Russia while also giving Trump cover to lift sanctions, a temporary measure he has recently extended.
Keatinge argues that European countries need to be far more focussed on going after Russia’s payment mechanisms, particularly digital. “The extent to which crypto activity supports Russia’s war effort is clear,” he writes, “yet repeated initiatives to elevate the importance of opening a concerted line of effort on this issue are ignored. This must change.”
I agree, though it won’t be easy, considering the diffuse crypto ecosystem, and the increasing sophistication of Russian involvement in it. As long as Telegram is willing to host markets, the markets will continue to function to some extent whatever Western countries do (see the story of Xinbi, a Chinese-language hub for illicit crypto.) However, it does look like someone somewhere has lost patience with the ease with which Russia is funding itself.
“The sanctioned Russia-linked cryptoasset exchange Grinex announced an immediate suspension of its operations, citing a ‘large-scale cyberattack,’” reports Elliptic. According to the statement, which Kyrgyzstan-registered Grinex posted on Telegram, it lost around $13 million worth of USDT in the hack, blaming the theft on Western intelligence agencies.
“Today the attempts to destabilise our fatherland’s financial sector hit a new level, with the direct theft of the assets of Russian citizens and companies with the involvement of complex cyberattacks,” the statement said. Grinex is the successor to Garantex, which was shut down just over a year ago after years of effort by Western law enforcement. I would be surprised if Western countries had decided to take direct action against Grinex, as the exchange claims they did. Westerners tend to be a bit too legalistic for this kind of smash-and-grab, and I would expect any operation to more closely resemble what worked a year ago, conducted with Tether’s cooperation.
Instead, I suspect this attack is the work of hacktivists, perhaps working for or with the Ukrainians. Whatever the answer, it is embarrassing for the Russians, shows their crypto-security is not impregnable, and has made a noticeable dent in trading volumes of the A7A5 ruble-denominated stablecoin, which has become a key sanctions evasion tool. Three birds with one stone.
The important point is that sanctions were never supposed to be permanent: they are a foreign policy tool, not a law enforcement one. Hundreds of billions of Russian-owned dollars are languishing in various frozen bank accounts, and Western countries need to start thinking about what to do with them. They can confiscate them, investigate them or — if they’re feeling brave — use their potential return as leverage to persuade wealthy Russians to break with the Kremlin. What they shouldn’t do is leave them as they are to gather dust.
Hopefully, now that Orbán is out of the way, European countries will be able to take firmer collective action but they also need to be imaginative, and to start behaving as if they actually want Ukraine to win, rather than just not lose.
Of course, the United States will have a lot to say about that too, and what it ends up saying about how to tackle the Russian crypto operations will depend on what happens in the midterm elections this year. So, it strikes me as a big deal that crypto firms are once more pouring tens of millions of dollars into campaign vehicles in their quest for, what they euphemistically refer to as, “regulatory clarity.” Among them, of course, is Tether.
If you’re wondering quite how it’s possible to spend that much money on elections, I draw your attention once more to the great Integrity Index, with its records for who’s been spending what. It boggles my mind that, for example, the three Democratic rivals to the Republicans’ Susan Collins for the Maine Senate seat have raised more than $17 million just for the primary. Collins herself has raised over $10.5 million. There really shouldn’t be that much money in politics.
Besides, when it comes to value for money, investing in court cases beats investing in politics every day of the week. I don’t know how much the (ironically) anonymous plaintiffs in the 2022 case against corporate transparency in Luxembourg paid their lawyers, but its effects just seem to keep compounding to the benefit of those who want to hide their wealth from society.
The European Union’s retreat from revealing the ownership of shell companies has given cover for Britain’s tax havens as they resisted efforts from London to force them to open up their own corporate registries. It looks like those efforts may have finally failed. “We are committed to full transparency, but I don’t think there will be any turning back,” said the British Virgin Islands’ Junior Minister for Financial Services Lorna Smith in comments confirming that the islands are in fact very much not committed to full transparency.
A version of this story was published in this week’s Oligarchy newsletter. Sign up here.
Oliver Bullough
Oliver Bullough
The post Why Europe must disable Russia’s crypto ecosystem appeared first on Coda Story.
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