German Crypto Crackdown: 47 Exchanges Shut Down Over Criminal Links

Key Takeaways

• German authorities have shut down several cryptocurrency exchanges in the country.
• The crackdown looks to dismantle the infrastructure that facilitates crypto-related crimes.
• Almost all of these exchanges had lax anti-money laundering compliances.

Germany Shuts 47 Crypto Exchanges

The Federal Criminal Police Office (BKA), Central Office for Combating Internet Crime (ZIT), and Frankfurt public prosecutor’s office said in a statement that these exchanges enabled anonymous transactions, allowing criminals to conceal the origins of illicit funds .

German authorities shut down 47 cryptocurrency exchanges. Credit: German BKA

The investigators allege that the exchanges bypassed registration and identity verification processes to expedite and anonymize cryptocurrency conversions .

These unregulated platforms reportedly served as a hub for darknet dealers, botnet operators, and other cybercriminals seeking to launder ransom payments and other illicit proceeds.

“We have found their servers and seized them – development servers, production servers, backup servers. We have their data, and therefore, we have your data. Transactions, registration data, IP addresses,” the authorities said.

Impossible To Prosecute

Despite seizing customer data during the investigation, German authorities acknowledge the difficulty of prosecuting those behind the illegal crypto exchanges.

In fact, they believe the perpetrators likely reside in countries with lax or nonexistent regulations on money laundering .

Therefore, the focus will shift to dismantling the infrastructure that enabled these crimes.

“Since cybercriminals often reside abroad and are tolerated or even protected by some countries, they often remain inaccessible to German law enforcement ,” the authorities added.

Additionally, the BKA’s recent seizure and sale of Bitcoin from the defunct Movie2k.to website highlights the potential for unintended consequences.

The large-scale sale in July caused significant market distress due to price fluctuations.

Previous Action On Bitcoin ATMs

This is not the first time German authorities have cracked down on the crypto industry.

In August, they conducted a nationwide operation to shut down  illegal Bitcoin ATMs , seize 13 machines, and confiscate €250,000.

The Federal Financial Supervisory Authority (BaFin) warned the public about the risks associated with these unregulated devices, which can be used for money laundering.

BaFin’s operation involved raids at 35 locations, with law enforcement agencies from across Germany participating. The seized ATMs were operating without the required licenses, violating German financial regulations.

The financial regulator stressed the importance of identity verification for cash transactions exceeding €10,000 and urged the public to conduct due diligence before using Bitcoin ATMs. Operating an illegal Bitcoin ATM in Germany can result in up to five years in prison.