Kazakhstan dismantles 'largest money laundering platform,' RAKS exchange

Kazakhstan has dismantled what it claims is the largest crypto money laundering platform in the former Soviet space, the RAKS exchange.

Authorities in the Central Asian nation say it RAKS exchange serviced almost two dozen darknet markets with an estimated user base of several million.

Kazakhstan disrupts region’s largest crypto laundering operation

The Financial Monitoring Agency of Kazakhstan, AFM, has completed an investigation into RAKS, a cryptocurrency exchange that laundered dirty cash for vendors on the dark web for years.

The entity, described as the largest of its kind in the Commonwealth of Independent States (CIS), was mainly active in Russia, Ukraine, and Moldova, besides Kazakhstan.

CIS was formed after the dissolution of the USSR to maintain ties between former Soviet republics. Ukraine formally ended its membership in 2018, and Moldova has suspended its participation.

The AFM identified RAKS while monitoring suspicious crypto transactions. It said the exchange provided “professional services” for laundering money from online fraud and drug trafficking.

It was highly regarded in the criminal world and collaborated with 20 of the largest darknet markets, with a total of over 5 million users, the authority announced Monday, further detailing:

“Over the past three years, the crypto service has laundered the criminal proceeds of more than 200 drug shops in the CIS countries.”

RAKS processed $224 million in illicit transactions

The illegal coin trading platform’s total turnover exceeded $224 million in fiat equivalent, Kazakhstan’s financial intelligence body also revealed.

During its probe, the AFM analyzed over 4,000 cryptocurrency wallets and found a number of accounts holding criminal proceeds.

The government agency managed to block 67 crypto wallets belonging to the exchange and froze digital assets in the amount of 9.7 million Tether (USDT) worth 5.2 billion Kazakhstani tenge.

In a press release, the regulator emphasized:

“As a result, the service has now been completely shut down. Social media accounts have been deleted and customer support has been suspended.”

The AFM added that it registered a wave of complaints from drug sellers on darknet forums about RAKS not fulfilling its financial obligations.

It insisted the measures have “dealt a significant economic blow to the shadow drug trafficking infrastructure, destabilizing supply chains, reducing drug market turnover, and undermining consumer confidence in illegal platforms.”

The monitoring authority also stressed it’s actively working to identify the operators of the crypto exchange, vowing to continue to combat money laundering schemes employing digital tools.

Kazakhstan, a major Bitcoin mining hotspot in Central Asia and the wider region, has been taking steps to legalize and regulate crypto-related activities, including trading.

Cracking down on illegal activities in the sector has been one of the pillars of the regulatory effort of the government in Astana.

Founded in early 2021, the AFM reports directly to Kazakhstan’s President, Kassym-Jomart Tokayev, the Russian business news outlet RBC noted in a report.

Its main tasks involve preventing money laundering and the financing of terrorism, as well as investigating economic and financial crimes.

In the cryptocurrency space, it’s focusing on curbing illegal mining, exchange and illicit transactions with digital assets.

In April, the authority unveiled it had brought down 24 financial pyramid schemes, freezing $4.2 million worth of criminal proceeds in cryptocurrency.

Last week, officials in Almaty, Kazakhstan’s largest city, announced the seizure of $10 million from a crypto Ponzi scheme that lured investors across the region.

In August, Kazakhstani law enforcement disrupted a scheme to mint digital currency using illegally sourced power that caused losses in excess of $16 million, as reported by Cryptopolitan.

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