TRM Weekly Roundup | December 12, 2024

Happy Thursday and welcome back for another Weekly Roundup — and what a week it’s been in the cryptoverse ??

Here is what our policy wonks Ari Redbord , Isabella Chase , and Angela Ang dig into this week:

• Hong Kong to introduce Stablecoins Bill on December 18
• Australia cracks down on crypto ATMs, vows action against operators flouting AML/CFT rules
• UK takes action against Russian money laundering network in Operation Destabilize, US deploys sanctions
• Rebel group HTS overthrows Syrian President — What do we know about HTS and crypto?
• President-elect Trump appoints David Sacks as White House Crypto and AI Czar
• TRM releases Crypto Adoption and Illicit Exposure Report

???? Hong Kong to introduce Stablecoins Bill on December 18

Last Friday, the Hong Kong Financial Services and the Treasury Bureau (FSTB) announced the gazettal of the Stablecoins Bill, which will kickstart the process of implementing a stablecoin regulatory regime in Hong Kong.

The new regulatory framework brings all stablecoin issuers who issue a stablecoin in Hong Kong, are a HKD-pegged stablecoin, or actively market such activities in Hong Kong, under the oversight of the Hong Kong Monetary Authority (HKMA) y. In order to access Hong Kong retail investors, stablecoins must be regulated under this framework.

The Bill also establishes minimum licensing criteria for regulated stablecoin activities, such as minimum paid-up capital, reserve assets, redemption policies, AML/CFT rules, and disclosure requirements.

The Bill will be introduced for a first reading in the Hong Kong Legislative Council on December 18. It will need to pass three readings and receive the Chief Executive's assent before it becomes law.

???? Australia cracks down on crypto ATMs, vows action against operators flouting AML/CFT rules

Last Friday, Australia’s Financial Intelligence Unit (FIU), AUSTRAC , announced that it has established a taskforce to ensure that crypto ATM providers registered with the agency "meet minimum standards and have robust practices in place to identify and minimize the risk that their machines will be used to move money associated with scams, fraud or other proceeds of crime."

AUSTRAC noted that while ATM providers form a "small number" of 400+ digital currency exchanges registered with AUSTRAC, Australia has the third largest number of crypto ATMs in the world.

According to TRM’s analysis, crypto ATMs worldwide have processed at least USD 160 million in illicit volumes since 2019. Last year, illicit volumes in the cash-to-crypto industry stood at 1.2% of total volume, double the 0.63% for the overall crypto ecosystem. Over 79% of that illicit volume was driven by scams and fraud.

Calling crypto ATMs "attractive avenues for criminals looking to launder money" because of their wide accessibility and "near-instant and irreversible transfers," AUSTRAC CEO Brendan Thomas said that the regulator would be tightening its monitoring of crypto ATM providers and would not hesitate to take action against non-compliant operators.

Authorities around the world have expressed concern about money laundering and consumer protection risks posed by crypto ATMs. Hong Kong is looking to regulate crypto OTC services including ATMs. Singapore has banned them completely. And, the UK and Germany took significant enforcement action against illegal crypto ATM operators this year, with the UK Financial Conduct Authority noting "[t]here are no legal crypto ATM operators in the UK."

???? UK takes action against Russian money laundering network in Operation Destabilize, US deploys sanctions

Last week, the U.S. Department of the Treasury ’s Office of Foreign Assets Control (OFAC)?announced?sanctions against five individuals and four entities tied to the TGR Group, a global money laundering operation following a?multi-year investigation?by the UK’s National Crime Agency (NCA) . This network facilitated sanctions evasion for Russian elites, transnational criminal organizations, and state-sponsored activities such as espionage.

The TGR Group, led by Ukrainian national George Rossi and Russian national Elena Chirkinyan, provided services that included converting illicit funds into cryptocurrency, enabling property purchases in Western countries, and bypassing financial restrictions.

Rossi and Chirkinyan also collaborated with Ekaterina Zhdanova, the head of the Moscow-based Smart Group, sanctioned earlier this year for her involvement in laundering ransomware payments and moving funds for Russian elites. TRM did a deep dive at the time of those sanctions?here.

The NCA initiated the unraveling of the network through?Operation Destabilise, which targeted Russian-speaking money laundering networks embedded in global criminal enterprises. NCA-coordinated activity has so far led to 84 arrests, with many already serving prison sentences, as well as the seizure of over ￡20m in cash and cryptocurrency.

The investigation revealed that Smart and TGR worked as financial enablers for organized crime groups such as the Kinahan cartel and UK-based drug gangs. By laundering illicit drug profits through cryptocurrency, the network allowed criminal organizations to reinvest in narcotics and firearms without needing to move physical cash across borders.

?? For more, read TRM’s deep dive here.

?????Rebel group HTS overthrows Syrian President — what do we know about HTS and crypto?

Last week, a coalition of Islamist rebels led by the group Haya’at Tahrir al-Sham (HTS), emerged victorious in a decisive offensive that led to the fall of Damascus. Syrian President Bashar al-Assad has fled to Moscow, where he has reportedly sought asylum, marking the end of his regime after years of civil war.

While we have not seen any crypto fundraising campaigns directly related to the ongoing operations of HTS, over the last couple of years, we have seen the solicitation of crypto by smaller HTS-allied groups (some of which are designated by the US) that are involved in the ongoing operations.

It is also important to note that this is a very fluid situation and, while HTS is a designated terror group, the organization has denounced transnational jihad or attacks against the West. The international community, including the US, seems to be acting very cautiously, but hopeful, about a post-Assad Syria.

Over the last two years, Syria has been a key hub of crypto use by terrorist groups and their supporters, in part due to the multitude of fundraising campaigns, many of which are for ISIS members and families held in northeastern Syria.

In April 2022, TRM Labs released a report on fundraising campaigns for families of ISIS affiliates in Syrian internment camps are leveraging crypto for financial transactions. Funds collected are often funneled through Syria-based exchanges such as BitcoinTransfer and Bitcoin Xchange, located in territories controlled by HTS. In addition, in July 2021 OFAC designated?a Tajik national named Farrukh Furkatovitch Fayzimatov for his involvement as a terrorist financier for HTS, and in April 2024, 44-year old Victoria Jacobs was?sentenced?to 18-years in New York State prison for using crypto to provide support to violent terrorist groups operating in Syria including HTS-affiliated groups.

While we have not seen the use of crypto to raise or send funds related to the ongoing operations of the last few days, given our recent reporting we are closely tracking the current situation.

??? President-elect Trump appoints David Sacks as White House Crypto and AI Czar

Late last week, President-elect Donald Trump named David Sacks as the White House's AI and Crypto Czar.

"David will guide policy for the Administration in Artificial Intelligence and Cryptocurrency, two areas critical to the future of American competitiveness. David will focus on making America the clear global leader in both areas," Trump posted.

Sacks is a limited partner in MultiCoin Capital, having come on board in March 2018, in addition to being a general partner and co-founder at Craft Ventures, which has invested in BitGo and Bitwise.

"[Sacks] will work on a legal framework so the Crypto industry has the clarity it has been able asking for, and can thrive in the US," Trump said.

The choice of Sacks, and the very existence of the role itself, demonstrates a focus on ensuring that the US is at the center of building the two most transformative technologies of our time.

?? TRM releases Crypto Adoption and Illicit Exposure Report

Cryptocurrency usage is continuing to catch on globally, with the leaderboard of countries with the greatest rates of adoption driven by myriad economic, regulatory, and political forces.

As crypto is adopted more broadly, policy makers and regulators need to develop scalable systems to govern its use — ensuring security while encouraging innovation. And for law enforcement and national security teams, crypto-enabled crime requires new approaches, tools, and intelligence to carry out successful investigations on the digital battlefield.

TRM’s?2024 Crypto Adoption and Illicit Exposure Report?reveals significant shifts in the global cryptocurrency landscape over the past year, based on analysis of billions of transactions across major blockchains. By examining crypto flows, user adoption rates, and the presence of illicit activities, this report allows policymakers and law enforcement to better understand global trends and potential areas of risk.

Here are a few of the key takeaways:

• India,?Indonesia,?Nigeria,?the United States, and?Vietnam?led in crypto adoption in 2024.
• Kenya?saw the largest increase in crypto adoption, doubling its crypto transaction volume from 2023.
• Georgia, Nigeria, North Korea,?the?Philippines, and?Russia?are the top five countries with the highest percentage of illicit exposure for entities primarily located in their jurisdictions.
• The top 10 countries for illicit exposure are largely driven by the exposure of their entities to?sanctions?or?fraud and scams.

?? Read the full report here.

• ???Check out our Global Crypto Policy Review & Outlook 2024/25 from the TRM policy team! 2024 was a pivotal year for crypto policy, shaped by growing waves ???of regulatory implementation, institutional adoption, and innovation; and strong headwinds ????caused by elections, the geopolitical climate, and the increasingly stretched resources of regulators —in our report we dig into this year’s policy and regulatory developments across 24 jurisdictions, representing approximately 70% of global crypto exposure.
• ???REMINDER: our next Quarterly Crypto Policy Roundtable is coming up next week — featuring TRM policy experts Ari Redbord , Angela Ang , and Isabella Chase . We'll review the dynamic shifts in crypto asset policy throughout 2024, discuss global regulatory highlights over the past year, and answer your questions on what’s next for crypto asset policy and compliance. Save your seat — December 17 or 18 — now.
• ???In November 2024, Ilya Lichtenstein and Heather "Razzlekhan" Morgan were sentenced for laundering over 120,000 Bitcoin, stolen from the crypto exchange Bitfinex in 2016. Their heist was the largest ever in history — valued at over USD 10 billion at the time of their sentencing. ??Biggest Heist Ever?? dropped on Netflix last week, detailing their crimes, and featuring a few familiar TRM Labs faces. Get all the details (plus a peek into filming behind the scenes) here.
• ?????What a year it’s been for the TRM team in Canada! Tyler Orr has traveled more than 22,000 kilometers across the country in 2024, supporting public and private sector customers’ use of blockchain intelligence to build a safer financial system. Check out where we will be in 2025!
• ???? Last week TRM’s Ari Redbord and Isabella Chase joined policy makers and business leaders in Brussels for Blockchain for Europe. Isabella joined a panel with the European Commission moderated by on the EU’s AML package and the new Anti-Money Laundering Authority while Ari joined Token Recovery’s Marcin Zarakowski for a fireside chat on mitigating financial crime in the crypto ecosystem. Most importantly, the TRM Team spent time with friends from across the ecosystem — including during a TRM Running Club session — discussing how to build a safer financial system as implementation of the new EU crypto framework (MiCA) takes form.