Austin Campbell, an adjunct professor at Columbia Business School, said in a Sept. 28 thread on X that he believes certain U.S. politicians use cryptocurrency as a "scapegoat" for financial crime, even though significantly more money laundering and other criminal activity takes place within the traditional financial system.
"I worry that the jihad by some politicians against crime in the crypto space actually preventing us from solving the problem and moving us backwards! Crime is more apparent in crypto because public blockchains are, well, public, and thus it's easier to detect crimes," Campbell said in the post. "Given the tradfi system is mostly opaque and most money laundering is not detected, I will leave it as an exercise to the reader to consider if we have an accurate view of crime in that space."
"Instead, politicians scapegoat crypto because it is visible, and meanwhile things like this happen with very little commentary or consequences," Campbell continued, linking to an article about Citigroup separating from its Mexican unit, Banco Nacional de México (Banamex) after a series of scandals. In one instance in 2017, Citigroup paid $97.44 million for Bank Secrecy Act violations after Banamex was accused of lax internal controls that enabled customers to launder money.
"Note that Banamex has an ongoing multi-decade history of bribery, money laundering, and sanctions violations," Campbell said.
Campbell shared his post in response to the Sept. 27 release of Changpeng Zhao (CZ) from prison. CZ, co-founder and former CEO of Binance, the largest crypto exchange in the world by trading volume, served a four-month sentence after pleading guilty to failing to implement adequate anti-money laundering controls at Binance when the exchange first launched. CZ agreed to plead guilty as part of a resolution with multiple U.S. government agencies, and he also stepped down from his role as CEO and paid a $50 million fine. Binance paid an additional $4.3 billion in penalties as part of the resolution. Campbell said in his post that CZ being sentenced to prison time demonstrates a double standard in U.S. authorities' treatment of money laundering in the traditional financial space versus in the crypto space.
"Binance paid a massive penalty and CZ himself went to jail in America for doing this, so let me ask the single most pertinent question I have on my mind: Why is it criminal for Binance to launder money but not for banks to launder money? Put differently, despite money laundering issues on the same scale as Binance, no major bank CEO is in jail for these violations," Campbell said. "In fact, it's basically a handful of lower tier employees who were bribed that ended up in jail, if that."
Campbell said he believes certain politicians use crypto as a "whipping boy," either to distract from larger problems with the traditional financial system or because they do not truly understand the issue of money laundering and cannot tackle it. "Neither of those are great options," he said.
Reports indicate that fiat currency, such as the U.S. dollar, is used in significantly more illegal activity than crypto.
