German police dismantles illegal crypto exchanges

The German Federal Criminal Police Office (BKA), in cooperation with the Central Office for Combating Internet Crime (ZIT), has dealt a severe blow to the “infrastructure of digital money launderers in the underground economy,” it said Friday. As part of the “Final Exchange” campaign, a total of 47 so-called Exchange Services hosted in Germany were shut down. These make it possible to exchange fiat and cryptocurrencies and are generally not illegal in Germany, as long as they operate according to the know-your-customer principle.

“The operators of the deactivated services are accused of deliberately concealing the origin of criminally obtained funds on a large scale through inadequate implementation of legal requirements and thus making themselves liable to prosecution for money laundering and the operation of criminal trading platforms on the Internet,” the BKA said in a statement, adding that it had seized extensive user and transaction data of the deactivated services.

“We see you”

Crypto exchanges that allow exchanges without a registration process and proof of identity are popular across borders in the digital underground. Cybercriminals use them, for example, to launder ransoms extorted as part of ransomware campaigns. According to the BKA, offers of this kind represent “one of the most relevant building blocks in the criminal value chain of the cybercrime phenomenon.”

“Among the users of the platforms that have now been shut down were ransomware groups, darknet dealers and botnet operators,” it said. The investigators also addressed these users directly with a special set up website. It remains to be seen to what extent the seized user data of the exchanges can be of use to the BKA. Among them are likely to be many people who are not resident in Germany and therefore not under its jurisdiction.

The investigators are also aware of this, and are therefore pursuing an approach that is primarily aimed at destroying cybercriminals’ infrastructure.

“This infrastructure approach has recently been able to withdraw considerable financial resources from the underground economy,” the police department said, citing successful actions against the darknet service ChipMixer and the cybercrime marketplace Kingdom Market as examples.