I was sued for economic espionage.
I’m sure I can’t really talk about it.
Who is Griffith?
Is he this devious, treasonous--
-Traitor.
a little bit more passion behind his motivations?
I do want to conquer the world, I really do.
Like, nerd pride.
In late 2019, American research scientist Virgil Griffith
was detained at Los Angeles International Airport
on charges relating to a trip he’d taken to North Korea
earlier that year.
Hi, my name is Virgil Griffith.
I’ve never done a video like this before, but...
actually a video, period.
But, I don’t know, I was told to be myself,
and I guess we’ll see how it goes.
Griffith’s work centered on Ethereum,
second only to Bitcoin as the world’s largest cryptocurrency.
Federal prosecutors allege that the former hacker
and self-anointed “disruptive technologist”
had made a speech at a crypto conference in Pyongyang
on how to use the tech to launder money
and skirt the ever-tightening financial sanctions
imposed on North Korea over the past decade.
The evidence didn’t look great.
He’d previously texted a colleague
about the idea of setting up an Ethereum network in the DPRK
and had flown out on a purchased diplomatic visa,
having seen his initial request knocked back.
It still isn’t clear if this eccentric crypto hacker
really was trying to launder money
for the most vilified regime in the world.
This September, Griffith finally faces trial in New York
on charges of violating international sanctions.
If found guilty,
he could spend up to 20 years in prison.
[The Business of Crime]
Crime cannot thrive in any major scale
without the laundering of cash.
We are facilitating corrupt dictators from looting their countries.
We are making drug dealers
and drug suppliers across the world ever more powerful.
If they can't launder their cash, they're going to have far less power.
Money laundering is about making illicitly-earned cash
look like it came from a legitimate source.
It's hard to say exactly,
but the United Nations Office on Drugs and Crime estimates that
anywhere between $800 billion to $2 trillion of dirty cash
is washed through the global economy every year.
Capitalism requires that this dirty money flows around freely,
and if it didn't, we could see a serious economic decline.
It doesn’t really matter if you’re a pariah state
trying to contort itself around the global financial system
or a two-bit drug dealer
with a shoe box stuffed with fivers under the bed,
the fundamentals are the same.
Whatever the scale, clean money is always the only worthwhile money.
But the process of scrubbing it spotless
isn’t always straightforward.
Think of it as a three-part process.
First, you need to place the money
somewhere away from its illicit origins.
Imagine that shoe box of cash deposited into a bank account
in small enough increments not to arouse suspicion.
The second part is layering, where you do multiple transactions,
often through shell companies and front companies,
to disguise the origins of the money.
And then there’s integration,
when you actually put it into a legitimate account,
and then it’s free to be used as if it were legitimately obtained.
If that sounds complicated, well, it’s sort of meant to.
Successful laundering relies on
muddying the waters of just where that money started its journey.
The easier it is to follow the flow of capital
back to the point of origin,
the easier it is to get caught.
Which is bad news for anyone with a bag of dirty cash
burning a hole in their pocket.
Ken Rijock knows more about this than most.
Today, he’s a financial crime consultant,
but in the late 80s, the high-flying lawyer was a Miami-based middleman
for some serious Colombian cartels
and other top-level organized criminals.
At the peak of his operations,
Ken would fly to the Caribbean
with hundreds of thousands of dollars in a tattered suitcase
primed and ready to wash.
But in Ken’s view,
things are worse now than they ever were back then.
With the rise of the internet assets, it’s so much easier.
Instead of getting on a plane and flying to a tax haven,
you can sit in your office, form an offshore company anonymously,
and then move money electronically
without exposing yourself by taking a flight to a dodgy tax haven.
This brings us back to Virgil Griffith,
or rather the very serious crimes he's been accused of.
Guilty or not,
using crypto to launder money maybe isn’t the smartest idea.
Some experts have likened it to pulling off a jewelry heist
but leaving a map to your apartment at the scene of the crime.
It is not a good idea to commit crime with Bitcoin
because the moment you have one single weak link
in your operational security,
all of your history is now exposed.
Because of its very nature,
it's a red flag to law enforcement.
Because why would somebody in a legitimate business
all of a sudden be moving cryptocurrency around?
It’s also true that the vast scale of the problem wouldn’t be possible
without the complicity of legit institutions across the world.
When it comes to money laundering,
there’s always hypocrisy at play.
For instance, weirdo hackers on ill-advised visits to North Korea
are very bad and need to be made examples of.
But when it transpired in 2012
that HSBC had spent years gleefully waving through
hundreds of millions of Mexican cartel money through its accounts,
no one cared all that much.
Banks are willing to pay the fines necessary if they do get caught.
They consider it to be the cost of doing business.
That means the largest banks in the world
pay multimillion dollar fines,
but there are trillions of dollars laundered.
Not only do I think the financial crisis
meant that banks came to somewhat rely on dodgy money
coming in back then,
I also think that the future
is not looking good for money laundering in the City.
If anything, it’s going to get worse.
I recognize that there have been some significant areas of failure.
I have said before, and I will say again,
despite the best efforts
and intentions of many dedicated professionals,
HSBC has fallen short of our own expectations.
The risk of actually being prosecuted and going to jail
for being instrumental in laundering money
is virtually nothing.
The only effective punishment that regulators can levy on a bank
is the death penalty,
that’s the loss of the bank’s license.
If there were regulators with intestinal fortitude in the US,
they could have canceled HSBC licenses in the United States.
Financial crime can be difficult to get excited about.
It is, by definition, invisible.
It comes wrapped in endless jargon,
systems to learn, acronyms to memorize.
Drugs and murder are easy to understand.
These are names with a face.
But money laundering is just as corrosive to society.
It's how ultraviolent drug lords keep their money and power.
It’s how repressive regimes succeed in asset-stripping their countries.
It's how corporations avoid tax
and how terrorist networks maintain their funding.
And it’s hard to point to a solution to something so entrenched
at every level of the global financial system.
So whatever happens to Virgil Griffith,
it won’t spell even the beginning of the end for money laundering.