Money Laundering Is Not A Crypto Problem

• Stuart Alderoty debunked the long-standing money laundering tag on crypto.
• WSJ reported on Ali Ghulam’s money laundering via US banks.
• Crypto supporters think the technology is a better tool to fight against money laundering.

Ripple’s chief legal officer, Stuart Alderoty, debunked the long-standing assumption linking cryptocurrencies to the persistent money laundering challenges faced worldwide. In a recent post on X, the top crypto personality highlighted a Wall Street Journal (WSJ) report on the activities of Ali Ghulam, Iraq’s long-standing “dollar king,” as evidence that the US dollar itself is at the heart of the problem.

According to Alderoty, anyone seeking answers to questions regarding money laundering issues linked to the US dollar should ask the New York Federal Reserve, the nation’s apex bank that let millions of dollars slip through.

Traditional Banks and Money Laundering

Alderoty focused his analysis on the ongoing saga involving a massive money laundering case. According to a WSJ report, three banks run by Ghulam recently wired tens of millions of dollars to fake vendors in Iraq who submitted fraudulent invoices. In the report, WSJ noted that US officials suspect Ghulam’s banks to be among over two dozen Iraqi banks involved in sending funds to Iran and its militia allies.

US auditors suspect the banks used front companies and falsified invoices to scheme past existing sanctions blocking Iran from the global financial system. According to the auditors, it could not trace about 80% of the over $250 million wire transfers that could flow through the banks daily. It noted the funds could go to Iran’s Islamic Revolutionary Guard Corps (IRGC), a designated terrorist organization, and other terrorist organizations in the region backed by the Iranian government.

Read also: Chainalysis Exposes the Underbelly of Crypto Money Laundering

Crypto Will Fight Money Laundering, Not Aid It

It is worth noting that Alderoty’s argument reinforces many crypto stakeholders’ position on the debate that adopting cryptocurrency in mainstream finance would escalate the money laundering challenges across many global jurisdictions. In their argument, several crypto stakeholders insist that most money laundering problems today involve fiat transactions, especially the US dollar.

Notably, most of the stakeholders argue cryptocurrencies are only pseudo-anonymous and not untraceable, as most critics claim. Some crypto supporters claim the blockchain technology backing cryptocurrencies positions them as tools for cubbing global transaction challenges and not enabling them. 

According to pro-crypto analysts, transactions on the blockchain are traceable and immutable, unlike the centralized fiat systems where people can destroy transaction records or deal in physical cash, which is the most untraceable transaction method.