Sanctioned by Russia while still a teenager, Alexander Browder has become a leading voice in the fight against crypto-fueled financial crime. As the founder of the Global Cryptocurrency Laundering Database and author of a Henry Jackson Society report on illicit finance in crypto markets, he reveals how authoritarian regimes are exploiting digital currencies on a staggering scale — from North Korea pulling a third of its government revenue through crypto schemes, to Russia moving billions to fund its war machine. He breaks down why enforcement feels like an endless game of “whack-a-mole,” pointing to the $94 billion Garantex exchange that spawned an instant clone the moment authorities shut it down.
Jeffrey Snyder, Broadcast Retirement Network
We’re going to welcome back to the program Alexander Browder. He’s with the Henry Jackson Society.
Alexander, it’s great to see you. Thanks for joining us on the program this morning. Thanks for having me on.
So when we last spoke, I think it was back in June or the May timeframe, you were sanctioned by the Russian government over a money laundering report. Before we transition to some of the latest crypto news, what’s the latest in terms of those sanctions?
Alexander Browder, Henry Jackson Society
Yeah. So I think since then, it’s really proven to people that the Russian government and other hostile governments really care about generating revenue through cryptocurrency and really care about stopping anybody who’s trying to expose this in their tracks. For those who may not know, over the past two years, I created the largest open source database of cryptocurrency money laundering and authored a big report about how it works and how to stop it.
And because of that, the Russian government sanctioned me, and I’m the youngest person in the history to ever be sanctioned by an authoritarian regime for exposing corruption. So I’ve gotten lots of support from different politicians across different countries in the US, in the UK, the foreign minister of Ukraine, the foreign minister of other countries have all sent congratulatory messages because it’s really a badge of honor for me. Yeah.
Jeffrey Snyder, Broadcast Retirement Network
So clearly you’ve struck a nerve and you’ve uncovered something that I think many of us probably weren’t aware of. When you think of cryptocurrency, you think of Bitcoin, you think of Ethereum, you think about kind of the current trading that’s done in those particular investments. In your mind, when you look at some of these transactions, is more of the trading in cryptocurrency legitimate trading or is it more bad actors that are actually using this?
Alexander Browder, Henry Jackson Society
So I think there are definitely some good uses for cryptocurrency, I completely agree. But the issue is that the hostile regimes are abusing all these things which were set up for good purposes and often either stealing billions of dollars from interesting cryptocurrency projects, meaning it completely crashes or allowing or deceiving regular individuals to invest in cryptocurrency, send them money, and then they lose all their cryptocurrency. And it’s become a really massive operation of scamming, especially senior citizens, out of sending hundreds of millions to billions of dollars through cryptocurrency.
Yeah.
Jeffrey Snyder, Broadcast Retirement Network
Why? I mean, obviously the Russians had their own currency, the Iranians had their own currency. I think I know the answer to this question, but why would these regimes, which are authoritarian, they’re not democracies like the UK, the US and other nations, why would they seek to use cryptocurrency?
Is it because they can hide illicit transactions or is it because their own currency is failing?
Alexander Browder, Henry Jackson Society
Yeah, so I think ever since many of these hostile regimes like Iran, North Korea, Russia have gotten under heavy Western sanctions in the traditional financial system, they’ve needed ways to skirt sanctions and to continue to generate revenue. And cryptocurrency has become a key part of this. For example, North Korea receives a third of their government revenue from cryptocurrency schemes.
And so it allows them to completely flourish and evade sanctions. And in the more broader space, a key part of my investigation over this past month have been exposing how, despite all these Western sanctions, Russia and other countries have been allowed to continue to skirt sanctions. I just got out article in Time magazine with the great Jeffrey Sonnenfeld of the Yale University, and we were discussing how all their laundering abilities have skirted Western sanctions and the Europeans, the people in the US and the UK haven’t done anything to stop this.
And so we’ve proposed a series of solutions to take down their sanctions evasion abilities. And just last week, the EU responded by sanctioning many of the crypto related sanctions evasion activity related to Russia, which has been a good step, but more to come.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I was going to say, you know, I know that we here in the States, we’re at war with Iran, whether we can have some kind of peace negotiation remains to be seen. But I know I saw Treasury Secretary Scott Besant talk about trying to put curtail some of the Iranian activities. It’s kind of like whack a mole, isn’t it?
The game whack a mole where you hit the mole and it pops up somewhere else. Can you really, given it’s less than transparent nature in terms of cryptocurrency, I mean, that’s the whole point of cryptocurrency. Are you able to really, as a government, get your arms around these types of transactions if we wanted to?
Alexander Browder, Henry Jackson Society
So I think you’re completely right. It’s completely like a game of whack a mole and governments can never stop and they can never feel like they’ve succeeded because bad actors are constantly developing. You mentioned Iran.
The U.S. just seized a billion dollars of cryptocurrency from Iran in the past three months alone. And so that’s a small fraction of how much they’re using cryptocurrency to generate revenue. And so it’s vital governments don’t let their guard down.
A significant case of this was in last year, the government took down a major cryptocurrency exchange called Garentex, which processed 94 billion dollars in illicit volume for the Russians. And what happened immediately after they took it down, a new cryptocurrency exchange came online called Grinnex, and it was a complete copy of this Garentex cryptocurrency exchange. It took all their users, took all their sales, and it’s continuing to operate to this day.
So especially in this world of AI developing and stuff, governments can never stop.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it seems like it is going to continue and you’re just doing your best to continue enforcing. Here in the States, two things I wanted to bring up and get your reaction. So a U.S. attorney out of D.C., Jeanine Pirro, announced in the Justice Department, announced 800 million frozen for victims of romance scams. You kind of talked about this at the beginning. This really preys on the elderly and just preys on people’s emotions. But that 800 million sounds to me like a lot of money.
But I would imagine just based on your laundering report, this is the tip of the iceberg. It’s a lot more.
Alexander Browder, Henry Jackson Society
And it’s fascinating, these romance scams. So the scammers are actually victims on themselves. So there’s these massive things called scam compounds in Cambodia and Myanmar, where thousands of people are trafficked to these compounds to work as almost slaves.
They take away their passports and stuff. And then they target people here in the West to get them to either fall in love with them or convince them that there’s an investment opportunity. And then they send thousands to millions of dollars into cryptocurrency to them.
And then the people in the West are left without any of the funds. And it’s a terrible cycle. And so this case is really great, seizing 800 million.
But 800 million is only a small, small fraction of the true amount that moves through this. So, for example, last year, the U.S. seized 15 billion dollars of cryptocurrency from one of these scam institutions called Huo Wan Group, which was one of the largest of these groups. And that 15 billion was still only a small fraction of the amount they processed in total.
So it’s really become one of the most prevalent issues. But I’m glad there’s been more focus on this. And for your viewers watching, you should always stay vigilant and never send funds to people you don’t know or people promising investment opportunities.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. And, you know, the other thing I wanted to bring, I agree with you 100 percent. I think you make some really good points.
Let me ask you about Minnesota. That’s one of our states here, as you know, in the United States. They banned cryptocurrency kiosks effective August 1st.
So are kiosks, which I would imagine like ATMs, really, that’s what they are, except that you’re exchanging cash for bitcoins. What vulnerability do they expose, these kiosks?
Alexander Browder, Henry Jackson Society
Yeah. So these crypto ATMs combine three dangerous characteristics. The first is that it’s one of the only ways people can turn cash into cryptocurrency physically without any intermediary.
Second, it can happen in less than seconds. You can put $50 in and get the equivalent out in Bitcoin or something. And the third is finality.
Once you do that, it’s nearly impossible to undo. And so these crypto ATMs have really gotten abused by many different actors, including drug dealers, your local drug dealers on the street who are selling fentanyl or others. They’re able to transfer their cash they get from the sales into cryptocurrency.
But even more worrying, you have people who are convinced who fall victim to these romance scams or these investment scams, or they get texting, they have a warrant out for their arrest and they need to send cryptocurrency to the police station. So they get duped into going to one of these one of these crypto ATMs and putting their cash, hard-earned cash into these machines and sending it to the scammers wallet. And it can’t be undone.
And so it’s really become a massive issue and a massive scale issue in the US alone. And so you can’t ban a blockchain, but you can remove a machine from a gas station, one of these crypto ATMs. And so this is like a transferable lesson. You need to go after the on-ramps, which is how you get the money onto the system and the off-ramps.
And so these kiosks are a key way to do this. And I think it will protect lots of victims and many other US states should adopt this. Canada has also been going heavily after many of these crypto ATMs. The UK now has banned out all ATMs and there’s none operating currently. So it’s really become a massive issue. And it’s good that they’re acting.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. People should remember that when you buy something with a credit card, if there’s fraud, the credit card, you can actually file a claim and the credit card can resolve that. Same thing with your bank.
If someone steals something from your bank account here in the States, we have federal deposit insurance, FDIC, that secures up to $200,000. With cryptocurrency, that doesn’t exist. To your earlier point, it really is just an easy way for, I mean, it does have legitimate purposes.
I don’t want to diminish that. It does have good investment purposes, but you really, it’s really heavily trafficked. Go ahead, I’m sorry.
Alexander Browder, Henry Jackson Society
Specifically with these crypto ATMs, people who are very worried or anxious will move very quickly and will send their money very quickly. And they only realize that they’ve been duped far later on. So there was this interesting person mentioned in one of these articles surrounding this Minnesotan ATM.
I think it was a nun or someone. So she was about to transfer her money into cryptocurrency to these scammers. But the only reason she didn’t is that this crypto ATM crashed.
And then after thinking about it and trying to go to a new ATM, she realized it was a scam. And so these scammers prey on how fast you can move and how anxious you become in some of these situations, which is why it’s such an easy tool they use.
Jeffrey Snyder, Broadcast Retirement Network
Last question for you, Alexander, where does AI play a role here? Does it help with, for example, with your laundering report, your open source laundering report? Does it help assess transactions and actually help prevent or unwind some of these cryptocurrency transactions that could be scams or laundering?
Alexander Browder, Henry Jackson Society
Yeah, I think AI is a game changer, game changer on both sides, however. I think it has massive benefits to protect victims and track transactions. There’s lots of different companies now which have been set up to try and trace cryptocurrency.
And with AI, you can do it in much faster times and at much higher standards than some human working on this. However, at the same time, it’s also being used by scammers who aren’t able to speak English to scam victims by producing good paragraphs with sound fluent and stuff, and then also by scammers who are trying to launder their funds. This is another new thing.
But I think currently the good guys are winning. AI is doing lots of great stuff with crypto and more generally. But there’s both the negative criminals using it and the good guys.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it seems like it’s pervasive. One of the articles, pardon me, I sent you, even in China, which I would argue is an authoritarian regime as well, and they’re often aligned with some of the, they buy and sell with some of these bad actors. They’re being heavily impacted.
So, you know, I guess the thieves attack each other as well. Really interesting. Alexander, we’re going to have to leave it there.
Always great to see you. Keep up the great work. And we look forward to having you back on the program again very soon, sir.
Alexander Browder, Henry Jackson Society
Thank you so much.
