In 2021, criminals laundered more than $8 billion through cryptocurrency. That sounds like a lot until you learn that the blockchain, as Alex Zerden explains, is a remarkably poor tool for hiding money: every transaction is recorded on a public, permanent ledger that investigators can read. The real story of crypto money laundering is a contest between people trying to obscure those records, with privacy coins, mixers and offshore exchanges, and a 50-year-old anti-money-laundering regime built for banks that regulators keep stretching to fit.
In this TalksOnLaw interview, recorded in the spring of 2022, Joel Cohen speaks with Alex Zerden, founder of the risk advisory firm Capitol Peak Strategies and a former U.S. Treasury Department official who worked at FinCEN, in the Office of Terrorism and Financial Intelligence, and as Treasury's financial attaché in Kabul, about how digital assets are used and misused, how the Bank Secrecy Act and sanctions law apply to them, and where the rules are headed.
From Silk Road to Ransomware
Zerden traces the illicit history of cryptocurrency from the Silk Road darknet market, which ran on bitcoin from 2011 until its 2013 takedown, through a recent South Florida darknet case that seized about $34 million, to ransomware. He walks through the three classic stages of laundering, placement, layering and integration, and explains why the blockchain's transparency makes it so different from cash: the recovery of much of the Colonial Pipeline ransom shows that transactions are pseudonymous, not anonymous. He also covers the tools criminals use to fight that transparency, including privacy coins like Monero and Zcash and mixing services, citing the 2021 arrest of the operator of Bitcoin Fog, and explains why a Treasury study found that NFTs posed a relatively low laundering risk compared to outright fraud.
Fitting Crypto into the Bank Secrecy Act
Zerden gives a tour of the U.S. anti-money-laundering framework: the 1970 Bank Secrecy Act and the Supreme Court's decision upholding it, the 1986 criminalization of money laundering, the creation of FinCEN in 1990, the USA PATRIOT Act's expansion of suspicious-activity reporting, and the Anti-Money Laundering Act of 2020. He explains FinCEN's "technology-neutral" position, set out in its 2013 and 2019 guidance, that anyone who transmits value on behalf of others is a money services business whether the value is dollars or bitcoin, why peer-to-peer transactions between individuals fall outside it, and how the Financial Action Task Force's "travel rule" is forcing exchanges worldwide to collect and share customer information they were never designed to hold.
Sanctions and the Road Ahead
On sanctions, Zerden explains that OFAC's rules are strict liability and bind every U.S. person, walks through the first designations of crypto exchanges (Suex and Chatex in 2021) and the first designation of a mining company (BitRiver, in April 2022), and describes the prosecution of Virgil Griffith for helping North Korea evade sanctions. He closes with the bipartisan consensus of the time around "responsible innovation": supporting U.S. leadership in financial technology while policing illicit finance, and with the deeper question of whether an analog, 1970s compliance regime can be rebuilt around digital identity.
What to Know Now
The scale has changed. Chainalysis estimates that illicit cryptocurrency flows exceeded $154 billion in 2025, most of it tied to sanctioned actors and much of it moving in stablecoins. The enforcement landmarks came quickly after this conversation: FTX collapsed in November 2022 and Sam Bankman-Fried was convicted of fraud and sentenced to 25 years, a judgment the Second Circuit affirmed in June 2026; Binance pleaded guilty in November 2023 to Bank Secrecy Act and sanctions violations and paid $4.3 billion, and its founder served a four-month sentence before receiving a presidential pardon in October 2025; the operator of Bitcoin Fog was convicted and sentenced to 150 months in 2024; and the couple behind the Bitfinex laundering scheme were sentenced in 2024.
The fight over mixers and developer liability reached the courts. OFAC sanctioned the Tornado Cash mixer in August 2022, but the Fifth Circuit held in Van Loon v. Treasury (2024) that immutable smart contracts are not sanctionable "property," and Treasury delisted it in March 2025. Tornado Cash developer Roman Storm was convicted in August 2025 of conspiring to operate an unlicensed money-transmitting business, with the jury hung on the laundering and sanctions counts; a retrial on those counts is set for 2027. The Samourai Wallet founders were sentenced in November 2025 after pleading guilty to the same unlicensed-transmission offense. In October 2026 FinCEN withdrew its proposed rule that would have designated mixing as a primary money-laundering concern, along with a 2020 proposal on self-hosted wallets.
Policy has shifted toward accommodation. The Justice Department disbanded its National Cryptocurrency Enforcement Team in April 2025 and announced it would stop "regulation by prosecution" of platforms, and the SEC dropped several enforcement cases. Congress enacted the GENIUS Act in July 2025, bringing stablecoin issuers under the Bank Secrecy Act, and Treasury proposed implementing rules in April 2026. The broader market-structure bill, the CLARITY Act, passed the House in 2025 but failed a Senate cloture vote in September 2026, with anti-money-laundering provisions among the sticking points. FATF reported in July 2026 that most jurisdictions now have travel-rule legislation but fewer than half have enforced it.
