German authorities shut down 47 crypto exchanges over alleged money laundering

The Federal Criminal Police Office in Germany and the Central Office for Combating Internet Crime spearheaded the operation targeting crypto exchanges that were allowing anonymous clients to trade and exchange crypto assets on their platform.

The German Authorities BKA in a press release announced their intentions with the operation and what they achieved after carrying out the operations.

“The Frankfurt am Main Public Prosecutor’s Office — Central Office for Combating Internet Crime ( ZIT ) — and the Federal Criminal Police Office ( BKA ) have shut down 47 exchange services hosted in Germany that were being used for criminal purposes. These were platforms on which conventional currencies and cryptocurrencies could be exchanged. 

The operators of the now-deactivated exchange services are accused of knowingly concealing the origin of criminally obtained funds on a large scale through inadequate implementation of legal requirements for combating money laundering ( so-called know—your—customer principle), and thus of having committed money laundering and operating criminal trading platforms on the Internet by Sections 127, 261 Paragraph 1 Sentence 1 №2 and Paragraph 4 of the German Criminal Code. 

Specifically, the exchange services enabled exchange transactions without going through a registration process and without checking proof of identity ( so-called know-your-customer principle). The offer was aimed at exchanging cryptocurrencies for other crypto or digital currencies quickly, easily, and anonymously to conceal their origin. 

Exchange services that enable such anonymous financial transactions and thus money laundering represent one of the most relevant building blocks in the criminal value chain of the cybercrime phenomenon. Among the users are ransomware groups, darknet traders, and botnet operators who use such services to introduce ransom money or other proceeds of crime into the regular currency cycle to be able to utilize the money obtained through criminal means. 

As part of the measures, the BKA and ZIT were able to secure extensive user and transaction data from the switched off exchange services. This data represents valuable investigative approaches in the fight against cybercrime.”, The BKA announced

The operation focused on crypto exchanges that were operating without conducting a basic Know Your Customer (KYC) for the clients making various financial transactions on their platform.

These exchanges by boycotting KYC open up their platform to various bad actors in the industry including ransomware attackers and drug dealers on the dark web.

The recent crackdown by German authorities is an extension of a wider effort to tackle cybercrime in the country. The authorities in the crackdown were able to obtain user data of clients of the exchange which could come in handy during future investigations.

Landmark achievements of these efforts by the German government include the seizure of the Chip mixer platform used to launder over €90 million worth of crypto assets and the seizure of over 50,000 BTC from movie piracy site giants Movies2k.