Seize and Desist podcast

S&D E12 - Exploring tech-driven approaches to asset seizures

Author
Lo Furneaux
Marketing - Associate

“Money laundering is often very boring…Crypto is new. It’s exciting. It’s different.” 

This time on ‘Seize & Desist’, our host Aidan Larkin is joined by investigative journalist Geoff White, author of ‘The Lazarus Heist’, ‘Crime Dot Com’, and ‘Rinsed’.

In this episode, Aidan and Geoff explore the influence of modern technology on money laundering and its ties to transnational organised crime. They examine how criminals have exploited advancements in digital asset infrastructure to hide their illegal activities and emphasise the important role of investigative journalism in illuminating financial investigations involving on-chain and off-chain activity.

They also discuss the difficulties of tracking illicit transactions in cryptocurrency, the influence of faster payments, and the future implications of AI-driven crimes.

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Timestamps

06:30 - Explaining Cryptocurrency and Asset Recovery to the Unfamiliar

07:30 - Investigative Journalism in the Digital Age of Financial Crime

14:00 - The Underperformance of Global Asset Recovery

18:00 - Crypto and Traditional Finance in Money Laundering

19:00 - Cash-to-Crypto On-Ramp Methods

22:00 - Cryptocurrency and Drug Trafficking

24:00 - Crypto's Role in Modern Criminal Enterprises

26:45 - Crypto vs Traditional Finance Prosecutions

29:00 - Balancing Crypto Adoption with Safety and Regulation

32:00 - Crypto Asset Recovery and Immutable Blockchain Evidence

34:00 - AI-Powered Crypto Thefts

36:30 - The Controversial Role of Mixers in Crypto

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Resources Mentioned

Book - Rinsed https://amzn.to/3LhGWui  

Book - The Lazarus Heist https://amzn.to/4cCbEdC  

Book - Crime Dot Com https://amzn.to/3S0kSbq  

Podcast - The Lazarus Heist https://bbc.in/3zN0VhH  

Podcast - Artificial Intelligence: Friend or Foe? https://amzn.to/4bE6rAM   

Podcast - The Dark Web https://amzn.to/3Y2vF8C  

Podcast - The Laundry E86 https://apple.co/3y1xyru  

Oliver Bullough - https://amzn.to/3VYIwGd  

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About our Guest

Geoff White is an accomplished author, speaker, investigative journalist, and podcast creator specialising in the intersection of organised crime and technology. 

For the past twenty years, Geoff has informed and entertained audiences on financial crime risks, money laundering, cryptocurrency, and the personal data trade. His work has been featured by BBC News, Channel 4, Sky News, The Sunday Times and many others.

His latest book, Rinsed, explores how technology has transformed the world of money laundering. Geoff is also the author of The Lazarus Heist, about North Korea's global cyber warfare, and Crime Dot Com, which delves into the history of hacking.

In addition to his books, Geoff has created and presented several successful podcast series for Amazon’s Audible, including The Dark Web, which exposes the internet's hidden underbelly, and Cybercrime Investigations, which takes listeners inside the world of an investigative journalist.

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Disclaimer

Our podcasts are for informational purposes only.  They are not intended to provide legal, tax, financial, and/or investment advice. Listeners must consult their own advisors before making decisions on the topics discussed.  

Asset Reality has no responsibility or liability for any decision made or any other acts or omissions in connection with your use of this material.

The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by Asset Reality employees are those of the employees and do not necessarily reflect the views of the company. 

Asset Reality does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in any particular podcast and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material. 

Unless stated otherwise, reference to any specific product or entity does not constitute an endorsement or recommendation by Asset Reality.

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Transcription

Speaker: Aidan Larkin

What do you think are the reasons why we're not seeing the big money laundering prosecutions in traditional finance? Why SBF and crypto cases, convictions, people being locked up. It seems that justice moves a lot quicker on the crypto cases yet I'm sure you can rhyme off more than me. I can think of five multibillion dollar cases involving traditional finances and banks, and no one has ever prosecuted. 

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Speaker: Geoff White

There's a long entrenched history of how money laundering, fines, and compliance failures, and prosecutions, and regulations kick in. It's often very boring. Linking it to something tangible like Institution X was fine because it was laundering money for this drug gang, that's interesting. Institution X was fine because of compliance failures is death by headlines awful. And so perhaps that's one reason why those more traditional institutions, they do get fined. There are failures, but they just don't hit the headlines because they're reported in a boring way because the regulations and the regimes around it are long and entrenched and boring. Crypto is new. It's exciting. It's different. You've also got in crypto, more than you have in traditional finance, characters. CZ in charge of Binance, Sam Bankman Fried in in charge of FTX. 

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Speaker: Aidan Larkin

Public facing noisy characters on, like, the invisible gray sort of pinstriped stereotypical banker. Exactly. Exactly. 

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Speaker: Dani Haston

I'm Dani Haston, Chief Revenue Officer at Asset Reality. Welcome to Seize and Desist. In this episode recorded on twentieth of June, Aidan is joined by Geoff White, acclaimed author of the Lazarus Heist, which looks at the impact of North Korean cyber warfare on the global stage, and his latest book Rinsed, which reveals how the global underworld washes its dirty money in the Internet age. Geoff is also a speaker, podcast creator, and investigative journalist known for his work on the intersection of organized crime and technology. He has been featured by a host of media outlets including BBC News, Channel 4, Sky News, and the Sunday Times amongst many others. In this episode, Aidan and Geoff explore the systems criminals exploit to hide their activities. They discuss the pivotal role of investigative journalism in uncovering financial crimes, as well as on chain and off chain criminal activity and the evolving landscape of technology enabled money laundering. Stay with us as we dive into this week's episode. Thank you for listening. 

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Speaker: Aidan Larkin

Hello and welcome to Seize and Desist. My name is Aidan Larkin, your host. And I am delighted to say that I'm joined today by Geoff White. Geoff, welcome to the show. 

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Speaker: Geoff White

Hi, and thanks for having me. 

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Speaker: Aidan Larkin

We've sort of bumped into each other at a couple of events, and I think I've been sort of secretly stalking you. You just don't know it. For every sort of large crypto event I've turned up at over the last sort of three, four months, I've noticed that you were on the agenda from the Chainalysis Links event right through to more recently Money 20/20 in Amsterdam. We always talk about the stories behind the cases. I mean, our audiences, people here dealing with the enforcement activity around seized assets and seized digital assets. And on the front end, then you're in an envious position of getting to tell the stories and tell the world about what is actually happening. Would you like to introduce yourself, Geoff, and tell us a bit about the latest book? 

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Speaker: Geoff White

Sure. Yeah. So I'm an author and investigative journalist. The area that I concentrate on is organized crime and technology. So if organized crime and tech come together, that tends to be where I hang out. So obviously a lot around computer hacking, but also, you know, cartel drug dealing and prostitution rings online, fraud and money laundering. So all these things are increasingly technologically enabled and they're all organized crime enterprises. So that's kind of the territory that I inhabit. 

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Speaker: Aidan Larkin

And it is a fascinating piece because one of our main themes and the aims of this podcast was around, you know, trying to keep these incredibly complicated subjects understandable. We often talk about the practitioner trying to go to court to get a freezing order on crypto assets and judges are asking, get Satoshi Nakamoto into my courtroom, please, or, you know, which jurisdiction is these blockchain cases dealt with. How do you find out? I mean, you've had a very sort of long and storied career as an investigative journalist and most people will know you from acting as the co creator and co presenter of the wonderful Lazarus Heist podcast. How do you approach these incredibly complicated topics but then break it down in a way? Because I would say you even have a harder job than law enforcement practitioners because you're trying to reach the general public. You're trying to reach the widest possible audience. What does your approach look like when you're trying to describe Yeah. The blockchain, digital assets, crypto assets? 

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Speaker: Geoff White

It’s really interesting. That's a really interesting question. What I've tried to do in my new book, Rinsed, which is about where technology and money laundering meet, the sort of links between technology and money laundering and that sort of symbiotic relationship. Again, approaching that, you know, money laundering is a complicated subject. Technology can be a complicated subject. So my job is to stand between, you know, the folks that you've interviewed previously and that you work with alongside, who frankly do the job. They're at the front end, and without them, there would be no story. My job is sort of stand between that community of people and the public and to try and explain to the public how it goes. And interestingly, you mentioned the Links conference, which was held by Chainalysis, the crypto tracing firm, I think it's fair to say, is their description of them, in New York. And there was a really fascinating presentation between, I think, it was a New York police officer and then an attorney who actually bought the case, a public attorney. And the police officer explains how they managed to track the crypto down and they found the criminal and they put them in court. And then the lawyer came on and he said, okay, you've heard all of that. My job now is to put that in front of a jury who've never heard of cryptocurrency. And, and this was the bit that really got to me and stuck with me. They can't stop me at any point, put their hands up and say, hang on. Wait. Can you explain that again? They sit there mute, and I have to just explain something and do it in such a way that I know they'll understand it even though they can't stop me and ask for more explanation. And I looked and I thought, well, that's my job. That's the same as what I do as a journalist. People can ask questions, you know, after the podcast goes out, they can ask questions about the book. But as they're reading or listening or watching the output that I do, they can't stop and ask me to go back and explain a bit more. So you've got to really drill down into it. And for me, the best and it is old advice in a way cliche and hackneyed advice. But the best advice is to try and explain it like you're explaining it to your mom or dad or your gran or somebody in the pub. Analogies can sometimes help. You've got to be quite careful with analogies. Sometimes they fit, sometimes they don't. But it's just trying to find those ways to talk somebody through it step by step. And examples can help as well. You know, if I send you some cryptocurrency. So immediately, you phrase the story in a kind of me and you situation. In cybersecurity, I'm not sure the same in crypto, but they have this thing of Alice and Bob. Which is often used to explain cryptography. Alice sends Bob an encrypted message. Oh, no. Nobody knows about Alice and Bob. If I send you an encrypted message, I think it's a better way of doing it because it makes it personal to the recipient of the message. So those are some of the ways that I try and do it, but it's complicated stuff. 

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Speaker: Aidan Larkin

Yeah. And it is, I think, at the most the highest level, even the fundamentals of crypto in particular as an asset recovery topic is very complicated. And when you start to talk about sending crypto, people often glaze over when there's always that person in the room and they're right when they sort of say, but actually you're not sending anything anywhere. Crypto's not moving. We are. The keys are. Yeah. In many cases, and it's understanding the distinction between when you control an asset and I usually get drawn back to the example of the bank vault. Sometimes you can just change the key to the vault and give someone else a new set of keys. Other times you can empty the vault and move it to a different location. And we're in exactly the same position where we try and have those sort of conversations. But I think that what really drew me in, that I listened to one of the recent podcasts you did, and forgive me, I think it was a Swedish or Norwegian conference? Recently? There was a podcast about the laundromat themed event and their resulting podcast and we were talking about the fact it's not about a digital asset. It's just it's fraud. It's financial crime. It's just that Yes. The venue has changed. The arena has changed. Now it's financial crime in a digital age. But what got you inspired in focusing on this, you know, niche of tech and organized crime and the interaction of money laundering? What was your your journey to be able to write these sorts of books and explore these topics? Yeah. 

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Speaker: Geoff White

It's a good question. I was working at Channel 4 News, which is a big news program in the UK. It's it's one of the more august news programs. It's a fifty minute in-depth program. And what was good is you could, you know, you could do investigative journalism. You could delve into things. Started covering tech there. And then the problem with covering tech was we do all these stories about, like, iPads and iPods and video games. And the problem there is you're at the end of the program, which is a vulnerable place to be because you're the sort of end of program funny. And obviously, that means if something comes in at the top, you get pushed off the end. That's how TV news works. If you've got a limited run program, limited time program. We kept getting pushed off the end. And I I started going to these tech conferences and cybercrime conferences and thinking, well, hang on. There's all this stuff going on. People are losing real money. Companies are being hacked. Nations are clearly waging cyber war on each other in the background. This matters. And also this is hard news, and it will get us up the news agenda. So gradually, as I did investigations, we moved up the news agenda until the point where you're the lead story. When you're the lead story on a program, it's very hard to drop you because, you know, the press release has been written, the headlines have been cut. You are the lead story. So you're unassailable from that point of view. But from there, I started moving into sort of organized cybercrime, obviously, nation state, but also criminal gangs moving online. And what was interesting about that was I didn't think I was covering money laundering. But in hindsight, a lot of the investigations is obviously based on cyber crimes, which often generate money, particularly the non state, the organized criminal gang hacking type stuff, and they needed to vanish the money and escape the money. So suddenly, I found myself reversing into this money laundering picture. And that was what, in the end, made me think, alright, I'm gonna actually try and write a book about this, explain what money laundering is, how it works, and perhaps most importantly, how tech is starting to rocket fuel this industry as I've described it in the book. 

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Speaker: Aidan Larkin

And that's a great summary. And I've just checked my notes. It was The Laundry podcast.

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Speaker: Geoff White

Oh, yes. 

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Speaker: Aidan Larkin

That I listened to recently. And, yeah, it's something that I think that yourselves and a lot of the investigative journalists sort of deserve credit for. I'm a big fan of Oliver Bullough. I've met him a couple of times at sort of economic crime conferences. And it's almost without the work that you guys do, there isn't really that awareness. As you say, it becomes this often, if it's not on the right news channel, just too complicated to understand. Yeah. And I think you guys did a really good job bringing it to that. The podcast series and then the book from Lazarus. You know something that could potentially either it can swing from being either something out of a Bond movie to actually it's just a really advantageous, they spotted a way of basically being able to steal something. And again, it's just this the news effectively changing. But or what do you think is the primary role of sort of investigative journalism in these states? You know, it's not about the headline. What do you find as the feedback or as you're seeing these? Are you guys I would love to learn the genesis of this. Is it seeing the story breaking? Are you out in the field? I mean, how does this all come together which results in this enormous body of work? 

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Speaker: Geoff White

It's a really interesting question. I'm aware as I'm saying this, that there are many, many other investigative journalists who do work that is frankly much better and more in-depth and more dangerous and edgy than mine. And you mentioned Oliver Bullough there again, who's worked fantastic. There are lots of other journalists working in this space who aren't closer really frankly to the sharp end than me. So I'll say that first of all. 

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Speaker: Aidan Larkin

I was gonna say, given the topic of your book and the people in your book, I would say you're still pretty close to the wind at the moment with the enemies that you could potentially be making. But we're all in the same boat when we have to I think you're you're on the right side of history.

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Speaker: Geoff White

is how I would put it. Hopefully so. Yeah. But look, I mean, the other thing is I come from, you know, approaching my late forties now, early fifties. It, like, the year where I came from, investigative journalism was this sort of art form where, you know, you people didn't tend to train in my era as investigative journalists and get made investigative journalists. You sort of emerged. It was in your DNA and you couldn't fight against it in one stage. You're obsessive like me. You just become an investigative journalist. I can never leave a story behind. I mourn. I mourn every single story that I've never got to the bottom of. Like, why did we not find the answers to that? And so if you are slightly obsessive like that, also the sense of imposter syndrome about it. People expect me as a journalist to know everything about a story. And I always felt incredibly self conscious if I didn't. And they'd ask me a question, I go, I don't really know the answer to that. And that felt wrong. Like, they were looking at me like, well, you're the journalist. Didn't you understand all of this? So I think if you're the kind of person who wants to really understand a story, possibly because you want closed down that imposter syndrome and feel like you really do understand something to the point where you can answer almost any question on it, investigative journalism is your thing. The way I go about it is I'm looking for an issue that's of relevance broadly in society. I'm looking for that issue where if you chat somebody in the pub or in a cafe, and you say, hey, you know, this thing the dark web, or money laundering, or cybercrime, or fraud, they sort of go, yeah, I have heard of that. Don't really understand it. Yeah. It's big, isn't it? But like…

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Speaker: Aidan Larkin

How does this affect me type of thing? 

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Speaker: Geoff White

Exactly. Yeah. Yeah. The issue that people haven't really they know it's there. They know it's important. But it's a bit like to research it, you'd have to go away and read lots of dry books. It's a bit like trying to give somebody their vegetables or their brown bread. You know, what I try and do is say, okay, I'm gonna take that brown bread and those vegetables, but cover it in really tasty toppings, and you'll like eating it. And at the end of the day, you've got your intake of vitamin b or c and whatever, but you've also enjoyed the ride. And key to that is finding the story, the narrative in it. And in a way that's not as difficult as you might think. Pick a story, start at the beginning, and explain it, A, B, C, D, E. Just keep going through the steps. One thing I do as an investigative journalist that's absolutely critical is put things on a timeline. You would not believe how useful that is because immediately, you can see, oh, this bit is missing. How did they get from that bit to that bit? Oh, hang on. There's a bit here where, you know, it goes the story goes off. What happens there? As soon as you can put things on a timeline, A) you can spot the gaps and where you're gonna investigate. But B) humans, we're chronological beings. We exist in time, you know, the very basics of things with this time. And so if you're telling a story chronologically, naturally, the listener, the viewer, the reader is gonna wanna follow it along because they wanna know what happens next. We all wanna know what happens next, and that's a chronology. So those are the things that I look for in terms of an investigation is there an issue and are there stories that are exciting and interesting that I think will work as a what happened next? 

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Speaker: Aidan Larkin

Well, I think obviously you're being very humble because when you just have a read down through some of the topics you've covered, I think this book was always a long time coming because everything from chiefcrime dot com through to the Lazarus heist. And now as you're approaching this sort of the topic that is very dear to my heart is the fact that asset recovery globally, how we take things from criminals underperforms. The common statistic that is quoted and has been for nearly a decade is that it's circa one percent of illicit proceeds are finally covered and forfeited. And clearly there's a lot to be done. And there is that massive misunderstanding that virtually every talk I give, I ask people, you know, have a wild guess what is the current estimate for amounts of money laundered globally. And it's rare that unless someone's actually read the report or listened to us in the past, they know that number. And I mean, I think the current estimate is circa sort of three to four trillion per year. I mean, these are just eye wateringly astonishing roles. And I think Rinsed is you're unpacking the role of tech and you have this almost perfect playground for those involved in money laundering to use these new systems in this new venue. But it's also very easy for people to maybe think, oh, this is a terrible technology then surely we should shut it down. I would love to give you the floor here to set the stage a little bit and unpack some of those issues within the book and the role the technology plays and why this technology, why are we seeing it now, and maybe what should we be thinking about as listeners? 

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Speaker: Geoff White

Yeah. It's interesting. And I'm aware in the book, obviously, focusing on technology and money laundering, cryptocurrency forms a large part of that. And I'm aware crypto cryptocurrency as a share of the global financial system is very small. And I think it's fair to say the amount of criminal money in cryptocurrency is the minority and not the majority of money. Now some people, I think, disagree with that. And I've spoken to people who just say, oh, it's all criminal, isn't it? I just don't think that's fair. I think unless you're gonna back that up with some proper research and statistics, trotting that out there is a bit pat. But there is illicit use in cryptocurrency, definitely. My other concern is around the statistics of illicit use of crypto, this sort of, oh, it's one percent or less than one percent or only a few percent. Well, one of the stories I cover in the book is about a pair of heroin dealers, a middle aged pair called the Din Sisters in Manchester, who on the surface, ran a beauty parlor and then in the background was smuggling in heroin from Pakistan, selling it on the streets of Manchester. Now they sold heroin for cash. That cash gets converted into crypto. Now, at that point, the cryptocurrency tracing firms would not know, as far as I can work out from the methodology, that that crypto is illicit crypto. It's from drug trade because it's a cash to crypto transfer. Most of what they're basing this on is, for example, ransomware payments. If you pay a ransomware payment, they can then see all that wallet there that the payment was made into is a ransomware gangs wallet. So we can track that and see the flows in and out. A transaction like I've just talked about, a drug cash transaction, from what I know, wouldn't show up on the radar. So that estimate of it's less than one percent or only a few percent, I think it's fair to say that's an underestimate. I don't know what the actual reality is, and I don't know how we would get there. But certainly, there's a chunk of illicit use of crypto. My worry is that traditional finance has thought to itself, well, crypto's over there. We don't do crypto. You know, we are National Bank X. We're not even we're not even too close to custody in crypto. We're not gonna touch that. So we don't have to worry about it. Well, that argument is gonna get more and more difficult to run. Your customers will increasingly have crypto. They will use crypto. They'll expect to be able to convert their crypto into fiat currency via your bank, via their bank account. If they're involved in fraud, either willingly or unwillingly or wittingly or unwittingly, the proceeds of that fraud can end up hitting your bank. You know, it starts off in crypto, but it gets to your bank. So this idea that crypto is that weird territory that's over the fence and you can just close your eyes to it, I just don't think that argument plays anymore. The other thing is interesting in terms of how traditional finance and technology have moved this money laundering scene forward is we've obviously had innovations like faster payments and online account creation. The COVID pandemic fed into this. We had massive movement towards online banking. People who'd never adopted it before suddenly adopt it. And you've got this feeble pace of technological innovation. You've got issues around identifying who people are when they set up accounts online. You've got issues of money mules being recruited online and making their accounts available. So even if you put aside that new finance crypto type territory, and even if you do think you can just hive it off and it's over the fence somewhere, in traditional finance, these technological innovations, this speed and frictionless experience they wanna give customers is creating money laundering issues itself. And then you get the crossover between the two where the crime starts in crypto land, but then the money's put into the bank, washed through very quickly thanks to faster payments, moved to a different jurisdiction. So across the scene, in all types of finance, old and new, technology is sort of rocket fueling, thanks to the speed, the frictionless nature of it, is rocket fueling those money laundering tactics. 

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Speaker: Aidan Larkin

So you've hit on two or three of my favorite topics. 

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Speaker: Geoff White

Yay.

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Speaker: Aidan Larkin

In crypto and asset recovery. And I wanna take you back because I unanimously was nodding along here, unanimously agreeing with exactly what you're saying. This is almost if we planned this and we actually didn't. So this is great. This is great. You've hit these two topics. So I've made a note to myself to remind to sort of come back to this as you were chatting there and I wrote out illicit slash ignorance. And there are two topics that I'm keen to get your view on. I think I one hundred percent agree with you. And I think it's, I'll unpack it a little bit. The illicit number in crypto is this much debated from a listener's perspective. For those that don't know, there is you know many many reports. And one of the key things about the immutability of the blockchain means that, as Geoff rightly said, you can track a transaction and if we know that that person's a hacker or we know that that person is using a mixer and then they interact with this other wallet well then we can make a good guess that this is also controlled by the same person therefore it's an illicit wallet and this very detailed piece of computer science and sort of attribution starts to take place and it's like smart water infecting everybody that's held this stolen property. So I completely agree, we can look at illicit activity and we can say absolutely with almost absolute certainty, it's at least this amount. Whatever that number is. But you've highlighted a really good example, similar to the examples we give generically when we talk about that's on chain. We can't get the off chain part. We can't see when someone goes into, and this is a true story, when someone goes into a trampoline park that doesn't have CCTV but has a Bitcoin ATM and a surveillance team watch people day after day after day. Money mules turning up with bags and just feeding this thing bank notes. And it spits out a brand new fresh as you like address that controls millions of dollars of crypto assets. And then you go to and exchange, it passes all the KYC and you're in the system. So I completely agree with you, but I'm interested to know, if you do know the background, I mean, what was that methodology of how those sisters in that particular case, what was their cash to crypto, on ramp or methodology? 

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Speaker: Geoff White

Yeah. It was… I know a certain amount about it. And this case came out of Greater Manchester Police. And also, we've already mentioned Chainalysis. This is a Chainalysis case that they investigated. Other crypto tracing firms are available, by the way. So they were dealing cash, and what they have was a whole network of couriers who were, in some cases, minor drug dealers themselves, some cases drug addicts, in some cases, just people who needed some ready cash and didn't wanna ask any awkward questions, who were ferrying the cash around in cars. And obviously, the police kept intercepting them. So eventually, the gang got in touch with a guy who called himself Chemdog, who we think lived in the southeast. And he basically said, look, you give me the cash. I will convert it into cryptocurrency. I will take a cut. I will then give you control over the wallet, and I will transfer it to wherever you want it to be transferred to. Now if you look at that in terms of logistics, getting that cash to Chemdog and swapping it over compared to, for example, taking it to an international money transfer service, which obviously gonna be in principle governed by Know Your Customer and anti money laundering regulations. So you gotta find a money broker who's gonna turn a blind eye to begin with tens of thousands of quids worth of drugs cash. And then that cash gets sent or remitted to, we think, Pakistan where they're buying the drugs. You've got to then release that cash in Pakistan. Now, obviously, you're gonna be releasing it to people who are gonna be going to use it to buy drugs, so then get shipped into the UK. Are those people trustworthy? You know, do you trust your your brokers in Pakistan? Versus the other option, which is giving it to Chemdog. He, we think it's a he, takes it, converts into crypto, and then it's liquid. It's fluid. You can transfer it wherever you like. You can transfer it direct to your drug contacts in Pakistan. So that was the methodology. But the real kicker with this was Chainalysis did some interesting research. Because, of course, as soon as they seized the phones that these couriers were using, they had messages between Chemdog and and the courier, who's a guy called Arjan Badesha, which showed the cryptocurrency wallets into which the money was gonna be transferred. So Chainalysis can now go, oh, okay. Let's look at those wallets and see what happened and sure enough, they see money going in from the drug gang. They see money going out from the drug gang. And they see that the brokers taking a percentage of four percent because you can track, you know, how much money goes in versus how much money goes out. Four percent is an absolute steal. If you translate that into profits for the drug gang, if they're washing, which we think they were probably in the millions through these cryptocurrency brokers, that equates to profits in the thousands of pounds. There's no way as a drug dealer, you're not gonna you're gonna turn your back on that. It's like, wow. Yeah. We use our money broker guy. He's gonna charge us us thirty, forty, fifty, whatever percent. We use this guy. It's four percent. That means we've got x thousand more profit on every deal. It's a no brainer. Absolutely. So that was the sort of that was the methodology with that. It's super fascinating. 

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Speaker: Aidan Larkin

And I think that, just to round it off as well

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Speaker: Geoff White

Okay. Just quickly on the seizure, you you'll like this, Aidan, on the seizure one, the Din Sisters were not exactly brilliant money launderers. So they started spending on, you know, fast cars, Beamers, Mercs, Rolexes, loads of designer clothes, like loads of designer labels. Now the cops obviously could see all of that, track it, and when they arrested them, all that gets shipped across to Ireland and auctioned off and that they make some money back from that. As far as Manchester Police told me, the crypto was never seized, never recovered. Now what that means is if you're the Din Sisters and you do I think they got about ten years. They'll serve about five. So they get out in five years. Potentially, they can just pick those wallets up, get the keys, unlock it, and their drug money is potentially still there Wow. Usable because it wasn't trackable, because it wasn't seizeable. That's as far as as pretty much sure that's where the Manchester Police case ended up. So again, you know, using crypto, cheaper, safer. Why wouldn't you as a court? 

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Speaker: Aidan Larkin

And this is well, so I have a potential as to why, that this could end differently. And also as an interesting aside, my own journey through asset recovery, the company that you're talking about where they ship those stuff off to Ireland, there was the former company that I was the asset recovery director for. So that was my department. So we had the contract with GMP ex GMP folks actually work on our team now. So we do know a lot of those cases, but obviously, I was I was out in twenty or when that case actually broke. And as you were speaking, I was actually googling that case and I didn't realize it was connected to, for me, the most fascinating criminal enterprise case of all time, which is sort of EncroChat. And how this sort of encrypted messaging devices got intercepted. So I think that in itself is worth its own Netflix documentary where you've got the combination of encrypted messaging devices being used by criminals who think no one's listening. Despite the government having successfully flipped somebody. You then have them using, as you say, digital assets. And it reminds me of the similarities around the famous three billion dollar seizure in the US, which was the amounts that were sitting for maybe six or seven years. So this goes back to the, you know, the immutability of the blockchain. So you do have a potential situation. And this isn't unique to crypto. I mean, this is something that if I was, running a money laundering operation and I was convicted, had all my assets, available assets seized, there's a good chance I've hidden a diamond somewhere. There's a good chance I've hidden a gold bar. And you I've been involved in situations personally when we've been seizing assets and now I've got a receipt for a one hundred thousand pounds Rolex and we can't find a Rolex. And it's just simply not, it's never recovered. And of course the criminal will shrug their shoulders and say police officer must have stolen it or someone's stolen it or but it's probably just been you know thrown out the window, a trusted third party's picked it up. And as you say, it's just being held until they get back. But the unique difference with crypto, and we saw this in the big three billion dollar seizure in the US, was that when the suspects stole the already hacked funds, they sat on it because they knew the police was watching. And the minute those funds moved, they got the IP and the OSINT attribution, they were able to go and actually arrest them. So there's an element of potentially that either the assets are genuinely beyond reach and they've lost the private keys or that actually the police know exactly where the assets are. They don't have the private keys and they're just waiting to pounce. But that's one of the unique attributes around digital assets that everything is being done on an open ledger. But as you say, the example I give and it's similar to your own examples is that this is an industry that's being taken advantage of. The technology is not bad. It's being used and abused. And I often give the example that we don't ban air travel even though couriers bring cash and bring drugs onto planes. But what we do is we ensure that every country has robust border controls, financial intelligence, sniffer dogs, detection methodologies. And if you had an international airport that had no customs officers and had no x-ray machines and no sniffer dogs, guess where everyone would use and guess the airport everyone would go to to launder. Yeah. I think the same happens with crypto. But the other point I wanted to unpack was the ignorance, and I elicit ignorance. And the ignorance I say tongue in cheek, but it is around a lot of the traditional financial ecosystem. Now we've saw spectacular headlines recently with BlackRock and the JP Morgans of the world, the Fidelity's of the world, some of the biggest institutions, trillion dollar money managers getting involved in digital. But you're right as recently as 2024 I still hear banks all around the world saying we have no exposure to crypto and it's like do you have PayPal or Revolut users or any other money service sort of provisions? It's kind of like saying just because you don't build a website doesn't mean you don't have exposure to the internet. What do you think are the reasons why we're not seeing the big money laundering prosecutions in traditional finance? What's your view on that? Why SPF and crypto cases, convictions, people being locked up? It seems that justice moves a lot quicker on the crypto cases, yet I'm sure you can rhyme off more than me. I can think of five. Multibillion dollar cases involving traditional finances and banks. And no one has ever prosecuted. 

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Speaker: Geoff White

It is interesting. Yeah. And there's an interesting question. And that question has occurred to me sort of tangentially, but I've never been asked it. So I'm now making up the answer as I go along, which is always great territory to be in. There's a few things I'd say. Number one is traditional financial institutions. There's a long entrenched history of how money laundering, fines, and compliance failures, and prosecutions, and regulations kick in. And it's often very boring. Entity x gets fined x amount for compliance failures. And I almost fall asleep looking at the headline. So linking it to something tangible like institution x was fine because it was laundering money for this drug gang, that's interesting. Institution x was fine because of compliance failures is death by headline. It's awful. And so perhaps that's one reason why those more traditional institutions, they do get fined. There are failures. We've had only in the last couple of days before we called in this podcast, HSBC being found in Switzerland being found for money laundering failures. But they just don't hit the headlines because they're reported in a boring way because the regulations and the regimes around it are long and entrenched and boring. Crypto is new. It's exciting. It's different. You've also got in crypto, more than you have in traditional finance, characters like CZ in charge of Binance, like Sam Bankman Fried in in charge of FTX. 

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Speaker: Aidan Larkin

Public facing noisy characters on Exactly. The invisible gray sort of pinstriped stereotypical banker. 

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Speaker: Geoff White

Exactly. You've also got prosecutors, particularly in the US, who and I hadn't really fully realized this until I was chatting to somebody recently about the way prosecution works in the US versus the UK. In the US, prosecutors want to sort of make a name for themselves. They want to launch a case which, you know, cements their career and their reputation. We have that in the UK. Lawyers obviously wanna be successful and wanna get big cases. But in the US, it's much more bit more naked and transparent and mercantile. So again, they will go after a big sexy case with a new type of technology to sort of make a big show of things. That's possibly one explanation. The other thing that people have said to me that I don't know how you'd substantiate this, but the theory among some in the crypto community is this is traditional finance trying to get new finance, edge it out of the picture or tame it or rein it in or knock it down. And that's what's behind these crypto cases. This narrative comes out often when the crypto prosecutions of money laundering happen like FTX. Some in the crypto community will turn around and say, well, yeah, you got FTX for laundering x amount, but look at traditional bank, you know, like HSBC, for example, you know, was doing loads more. That's partly a function of the fact they're handling proportionally much more of the financial system. But why aren't you reporting them? Why are you reporting all about FTX? You know, it's obviously because traditional finance is trying to kill off this new crypto baby as it were. I don't know. I'm just putting out there reasons why, it might be more prevalent that we have money laundering convictions around new finance and crypto. 

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Speaker: Aidan Larkin

And I don't disagree with you. I think that my own sort of view on it is around that one, it is the appetite to report on it. Even just saying, you know, the words HSBC can already think of the other offenses. And it's like, I do get the argument that, well, if you're that much bigger, there is going to be more problems. But then I would for the audience of doubt, I'm not a crypto bro in any shape of the imagination. I'm pretty agnostic. I think that the technology can be used wonderfully, but I do look at it as a former investigator who's been involved in child exploitation material investigations and murder investigations and drug trafficking and human trafficking. Like, I've seen the how any technology can be used in a terrible terrible way. I don't want to ban the internet but I certainly want to restrict and enforce and regulate and educate and do all of the guide rails sort of things. So I'm all for safe crypto adoption. I am the guy who does agree and I have very strong opinions on things like mixers and that I don't see a legitimate use case for them. Bar the 0.01 percent cases when someone is truly running for their life, when someone is truly trying to overthrow a dictator and they wanna fund it, like outside of that. And I haven't seen it. Why don't you just launch a compliant mixer that files reports and your jurisdiction complies with the regulator and you can still confidentially tell the regulator about the nefarious stuff? Because the reality is ninety nine percent of the customers are probably nefarious. That's why they don't do it. But I think that the banking point banking has had a century of compliance controls practice and they'll had all of them investment and all of the education. So I don't let them off lightly that it's a transactional piece. But I do think that what's interesting is that we're seeing this blueprint in asset recovery and I think there is a willingness in the industry to almost self regulate, you know, identify. Remember that the biggest abuses of the technology are also the biggest saviours. The very technology that enables faster movements of payments with pseudo anonymity also is the kryptonite to that because then you do have these blockchain analytic tools that can't trace everything. And it's a fascinating comparison when you see that crypto asset recovery and seizures and detections and prosecutions, and maybe this is the virtuous circle why the prosecutors are jumping on that bandwagon, because the results are astonishing. I mean crypto seizures are outstripping regular seizures like ten to one. We're seeing billion pound and billion dollar seizures in crypto that has never been achieved before in regular assets. And I'm starting to think that that's maybe part of that virtuous cycle that you've got immutable ledgers, so like Silk Road. Once you find the person, you can pin the tail on the donkey very easily. You've got rock solid evidence in most cases because it's pretty immutable. It's your IP. You're caught up holding the laptop that you've got a PIN number to access. And I'm wondering if that is creating that sort of virtuous cycle where they're hunting these cases down, there's permanent footprints, There's irrefutable evidence in many cases. We saw the Bitcoin fog decision go the way of the industry as well. And now then you've got recoveries being made, assets being seized, associated headlines, because no one wants to read about a money laundering case and as you as you say top of the hour on the news story, a complicated merchant banking impossible to get your head around, but colorful guy that's been on stage with former presidents who wear shorts, who, you know, steals lots of money. It's just it's gonna lead a new story. But what do you think is the future of this when you, you know, when you've done an excellent job in your book talking about the likes of the big hacks, the Lazarus heist, the Axie Infinity, and... six hundred million dollar thefts and things. Yes. Like, what is this gonna look like in future if you were guessing now in future gazing with the increase in AI to utter those immortal letters? How does AI and that intersection of the capability of a money laundering operation? What do you think we're gonna be talking about in the next couple of years? 

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Speaker: Geoff White

Yeah. It's so interesting. And picking up on that case you mentioned, the Axie Infinity case, this was a hack on a video game back in twenty twenty two, during which, as you rightly say, six hundred and twenty five million dollars was stolen, allegedly, by the North Korean government. It's an astonishing case. It's one that I cover in the book in quite a lot of detail. I was looking for, like, a blockbuster chapter to end the book with. And the Axie Infinity case is it? It delivers in spades. 

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Speaker: Aidan Larkin

It doesn't get much bigger than that. 

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Speaker: Geoff White

Yes. In fact, I've been circumspecting the book about this, but on podcast and in talks, I'm a bit more ballsy. And I it is, I think, the biggest theft of all time Yeah. In terms of one hit on one victim valued at the time of the theft. I've struggled to find anything that's a bigger single one off hit. Certainly, in terms of speed, it took them one minute fifty five seconds to steal that money. That is the fastest theft on record by a long margin. 

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Speaker: Aidan Larkin

You compare that to Hatton Garden drill no drilling for three days over a bank holiday. For a relatively small amount of money. 

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Speaker: Geoff White

Exactly. Yeah. That they then buried in graveyards and then tipped off Sky News to where they buried it. Anyway, old school crime. But what's interesting about the Axie case is it does point towards the future. The dilemma for the alleged North Korean hackers was, where do you go with half a billion of hot crypto? Like, where's got the volume and liquidity to absorb that amount of money and is gonna do that no questions asked? This led them to a mixer called Tornado Cash, which is sure many of your listeners know is mixers incoming crypto with its pools of existing crypto and then exits it, ejects it to a fresh wallet address, which can be used for money laundering. There are some, it has to be said, legitimate privacy preserving reasons. What people have told me about mixers, from the sounds of it, you look as sconce at those, less convinced of those. But people who've used Tornado Cash have defended it to me in ways that I found, you know, fairly reasonable. But what's interesting is speaking to the people who I wasn't able to interview the people who created or allegedly created Tornado Cash, partly because most of them are now on trial or in prison. But one of the guys who helped fund it was fascinating. And it's worth bearing this in mind. His view of crypto in general and the blockchain in general goes way beyond currency and money and value. It goes to the heart of how we make decisions as human beings. His vision, and he's not alone in this, is that as human beings, we are failing. And if you look at our world, you look at the Middle East, you look at Ukraine, you look at cost of living crisis, inflation, you look at the Mexican border, we are failing. And we're failing because we can't coordinate our decisions properly. We are hidebound by political differences, religious differences. Their view, or at least the view of some in the crypto community, is that the crypto technology can be used to solve those things. We will be able to make decisions using this technology at scale no matter what our color, creed, religion, race, politics, whatever. Mhmm. And the mixer that they set up, the technology that drove that, the sort of democratically distributed technology that that mixer used, will do that. It will allow us in the future to make decisions. And so if you interfere with this stuff and you try and shut stuff down like tornado cash because you're like, oh, it's being used for money laundering, you are jeopardizing the future of humanity. That is how seriously they take this. Now you can look at that and think, well, that's bollocks. You know, you're just bigging yourself up there. But this disbelief is so passionately held, it's hard for me to overstate how passionately held it is. And again, you may think, well, who cares what this guy thinks? These people write the future. They write code that controls the future. They wrote the code of Tornado Cash, and it worked very successfully and is still working today. So you may think these people are niche people we shouldn't listen to because they don't mind money laundering. In favor of privacy and freedom of speech, they're happy to tolerate some money laundering. Regardless of what you think of them, they will write your future. They will write the code and write the technology that in future will change our world. So we need to listen to what they're saying and at the very least engage with it even if you agree with it or not. So that's where I sort of see things going is traditional entities like FinCEN, the US Treasury and so on, trying to fight this financial war and the people who are on the technology side of it coding around that attack, using code to evade that attack, not because they're nasty people, but because that's what coders do. See a problem, see an obstacle, code around it. That's the approach. And it's worth bearing that in mind, I think. 

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Speaker: Aidan Larkin

You know, it's a really good point. And like I say, I don't disagree. I think that the position that they're presenting is accurate. We have global money laundering that is out of control. We have a lack of prosecution and accountability for some of the worst crimes of humanity for all the other reasons you listed off. We then have the one percent of assets recovered from criminals. I mean, it is not a good world order currently. And I completely agree. I think that it's the intersection around in the same way, I mean, no right minded person would say we shouldn't have an Internet. But it's about how do we, you know, have industries collaborate together in a responsible way. And we have seen regulators get it horribly wrong and just try and blunt instrument things they don't understand. And as you rightly say it just drives people to the edges. And these things will continue to exist, it's do you want them to exist in mainstream where there can be responsible attitudes towards, you know, privacy but do it in a way that and I think it's fundamentally because the trust is lost. Mhmm. And I think that's why people want to build these systems. And I do think the likes of the speed of development with things like AI as well, the results are too big. The world's most valuable company as of this morning, you know, is now an, sort of, you know, a company that is sort of building its kid's career and Nvidia on AI and the chips that will enable things like chat gbt. So it's an absolute overwhelming inevitability that when you have that amount of power, it is going to become a very, very different conversation. Who would have thought ten years ago two US presidents would both be saying, I like crypto more than you. Both of them vie for people sort of interested. It is a passionate issue. It's going to be something like take two Americans and ask them about their views on gun control and that could be a very, very partisan or bipartisan conversation. Geoff, I think we could do this for days on end. And I think that this is a… this has been a phenomenal conversation and I would strongly recommend anyone to go and grab a copy and listen to Geoff’s book by doing what I've done and download that on Audible. From Amazon, Rinsed from Cartels to Crypto, How the Tech Industry Washes Money for the World's Deadliest crooks. We'll include a link as well in the show notes. And, obviously, highest true to Geoff first crossed my radar was just the astonishing Lazarus Heist podcast and the resulting book. So, Geoff, thank you very much for taking the time to join us. I believe one more trip and then you have a bit of time off as you continue the world tour. Is that right? 

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Speaker: Geoff White

That's right. Yeah. Yeah. Book tour as such as it was is sort of coming to an end and I'm looking forward to a nice a nice quiet summer. Maybe working on the next book. Who knows? 

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Speaker: Aidan Larkin

There you go. Well, I was gonna say I have a funny, I think you should be targeting asset recovery and the lack of prosecutions and money laundering in traditional finance. I think we should start to look at the old guard because I think they're looking across these new kids in crypto and saying, focus on them. Leave us alone. That's just this podcast host personal thoughts. But, Geoff, thank you very much for your time, sir. It's been an absolute pleasure speaking to you. 

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Speaker: Geoff White

Thanks, Aidan. Appreciate it. 

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Speaker: Dani Haston

We appreciate Geoff taking the time to share his insights with us. If you'd like to hear more from Geoff, make sure you check out his podcasts, Artificial Intelligence Friend or Foe and the Dark Web. You can also grab a copy of his books, Rinsed, The Lazarus Heist and crime dot com and don't forget to follow him on LinkedIn. If you've enjoyed today's conversation, like and subscribe to the Seize and Desist podcast on your preferred platform and leave a comment platform and leave a comment and any suggestions for guests you'd like to see in future episodes. Next time, Aidan will be joined by Kristen Hecht who is uniquely positioned to provide us with compliance insights, having enjoyed a diverse career in chief compliance roles at HSBC, Meta, and Binance. They'll discuss her experiences implementing effective cross sector compliance program, the roles of sanctions and asset recovery amidst ever changing regulations, and the use of emerging technologies like AI and digital asset compliance. Seize and Desist is brought to you by Asset Reality. Thank you for listening. 

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Speaker: Lo Furneaux

Our podcasts are for informational purposes only. They are not intended to provide legal, tax, financial, and or investment advice. Listeners must consult their own advisers before making any decisions on the topics being discussed. 

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