Transcript: UK uncovers criminal crypto network

This is an audio transcript of the FT News Briefing podcast episode: ‘UK uncovers criminal crypto network’

Sonja Hutson
Good morning from the Financial Times. Today is Thursday, December 5th, and this is your FT News Briefing.

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Donald Trump has named his pick for Wall Street’s top watchdog. And South Korea’s president took a massive political risk in declaring martial law, but it backfired. Plus, what links Russian spies with Irish cocaine traffickers? Well, they’re both allegedly using the same crypto crime network.

I’m Sonja Hutson, and here’s the news you need to start your day.

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US president-elect Donald Trump has nominated Paul Atkins to chair the Securities and Exchange Commission. Atkins is a former commissioner for the agency. Trump’s choice signals that the SEC will take a looser approach to regulating Wall Street and a friendlier stance on cryptocurrency. Atkins has talked before about wanting to enable crypto markets to flourish. He’s also been a critic of the US audit watchdog, which the SEC oversees. Industry leaders celebrated the announcement. The CEO of the American Securities Association said he’s looking forward to working with Atkins to, quote, rebuild the public’s trust and confidence in the agency, which was a not-so-subtle dig at the current SEC chair, Gary Gensler. He has issued a ton of new rules and pursued a lot of enforcement actions.

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It’s been a wild few days in South Korea. Conservative President Yoon Suk Yeol declared martial law in a shocking address to the nation late on Tuesday night. But then, just hours later, he was forced to lift the order after parliament voted to block it. It was a gamble by the president that has rocked the country and put his political future at risk. My colleague Christian Davies has been following the saga and he joins me now. Hi, Christian. 

Christian Davies
Hello. 

Sonja Hutson
So we are speaking to you on Wednesday night in Seoul. What’s the mood like? 

Christian Davies
So this has really been a sort of lightning dash from peace and stability to feelings of real insecurity and concern and now overwhelmingly of confusion. And probably we’re starting to see now growing anger at this what looks like a botched political gamble, which has backfired spectacularly on the president. 

Sonja Hutson
So walk me through this scheme. How exactly did it work? 

Christian Davies
Yes. So President Yoon won presidential elections in 2022 by a margin of less than 1 per cent in Korea, the presidency and the parliament are chosen in separate elections. And so it’s quite common for the president and the parliament to be controlled by different parties. And so this is the situation we have at the moment with a left-wing majority in parliament. This has left him boxed in not only by the opposition majority, but also by his own unpopularity and a series of scandals and very, very little room to manoeuvre. And analysts believe that this was really an act of desperation from an acutely isolated president. The irony is that he may well have curtailed his own presidency and possibly even sealed his own fate in terms of impeachment. But, of course, we don’t know yet if that’s going to be the case. 

Sonja Hutson
What’s likely to be the economic impact of the political instability for South Korea? 

Christian Davies
The market reaction has been muted. One of the reasons that Korean stocks have historically been quite undervalued is precisely because of this kind of political instability that South Korea has historically experienced. And so the other important backdrop is rising concerns about South Korea’s slowing economy. And on top of that, of course, more recently, there’s a great deal of anxiety in the country over president-elect Donald Trump’s potential trade policies, because South Korea, of course, is a famous trading nation with an export-dependent economy. And so this political instability is happening at a time of economic anxiety, which has contributed to a sense of drift at a time where actually the country really needs to engage in serious reform efforts. 

Sonja Hutson
And what happens now in the immediate aftermath of this attempt to impose martial law? 

Christian Davies
Opposition parties have submitted a motion to impeach the president. But the dynamic, which is not yet clear, is the extent to which the street protests will sway the outcome, because it’s widely understood that Korean democracy and Korean democratic and legal and political institutions are extremely sensitive to public opinion. This gambit was pretty roundly rejected by the South Korean society. And so in many ways, although this is a depressing episode, it has also illustrated the resilience of South Korean civil society and democracy in the face of what looks to have been a foolish action from its elected president. 

Sonja Hutson
Christian Davies is the FT’s Seoul bureau chief. Thanks, Christian. 

Christian Davies
Thank you very much. 

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Sonja Hutson
French Prime Minister Michel Barnier was ousted yesterday in a no-confidence vote. Both the left- and right-wing parties in parliament banded together to approve the motion. A lot of lawmakers were unhappy with his controversial budget. It included €60bn in tax rises and spending cuts to rein in the country’s deficit. The vote also triggered the collapse of the government. It’s the first time that’s happened in France since 1962. President Emmanuel Macron will now have to select a new prime minister. And with such a divided parliament, that will definitely be difficult.

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A multibillion-dollar money laundering scheme came to light yesterday. The UK’s National Crime Agency has uncovered a network that used cryptocurrency to move money across borders. Drug traffickers and Russian spies were among its top clients. The FT’s Miles Johnson has been investigating how this underworld operated. He joins me now. Hi, Miles. 

Miles Johnson
Hi. 

Sonja Hutson
So walk me through this network. How did it work exactly and who used it? 

Miles Johnson
So this network, it’s a sort of two-sided network that brings together two very different types of people. So on the one hand, you have these organised criminals in Europe, frequently cocaine traffickers who are making vast amounts of money, which builds up in physical cash. And then on the other side, you have these Russian crypto exchanges, which often are being used by so-called ransomware groups which extort people on the internet. And they’re often paid in crypto. They want to change that crypto into physical cash. So they both want kind of these things which are mutually beneficial. And so to do this, they used what’s called a stablecoin called Tether, unlike Bitcoin, which is very volatile and price tether is tethered to the US dollar. 

Sonja Hutson
OK. That’s how this network got the cash and the crypto to launder money. Who then is using this network? 

Miles Johnson
So this is a sort of fascinating network where really some quite unlikely characters are sort of brought together through this money laundering scheme. So you have, according to the UK’s National Crime Agency, you have cocaine traffickers, you have the sort of notorious Kinahan cartel, which is this Irish family, which is sanctioned by the US government for being really huge cocaine traffickers. You have Russian spies, you know, the NCA that said this network funded Russian espionage operations. You have oligarchs trying to buy property in the UK. So, you know, it really is this sort of quite colourful cast of characters. 

Sonja Hutson
And do we have any indication of just how widespread these types of criminal rings using crypto could be? 

Miles Johnson
So in the instance of this investigation, there have been 30 countries involved. And this is just one network. Over recent years, we have seen a sort of move to crypto, which has been accelerated by a couple of things. Firstly, on the sort of street-level criminality side, the Covid lockdowns had a big impact where it became harder to physically move cash, it became more suspicious and then also geopolitical events. So the avalanche of western sanctions against Russia, you know, stuff to do with Iran and non-state actors backed by Iran, that has also seen a sort of move in some instances towards crypto. And so that is definitely something I say would be a growing trend. 

Sonja Hutson
And you know, Miles, the timing of this feels interesting because crypto is kind of back, right? You know, US president-elect Donald Trump seems to have embraced it. So how do stories like this one complicate the industry’s attempts to rebrand itself as legit? 

Miles Johnson
I think for people who are already crypto evangelists, I don’t think something like this will change their opinion. I think that people who are defenders of crypto will say, look, this is a currency and crime has taken place, but crime takes place using US dollars. But it does raise some more serious questions about the sort of evolving nature of global money laundering and how the countries which are sanctioned by the US government are using Tether and other stablecoins to conduct activity which the US government is trying to stop. And so I think it remains to be seen what happens with this incoming Trump administration. But maybe over time, people will become more cognisant of the fact that this network is gonna be being used for stuff which really is seen to be contrary to the interests of the United States. 

Sonja Hutson
Miles Johnson is an investigative reporter for the FT. Thanks, Miles. 

Miles Johnson
Thank you. 

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