Ryan Wedding organization allegedly used cryptocurrency to launder drug money

Canadian fugitive Ryan Wedding and his accomplices allegedly made extensive use of cryptocurrency to launder the proceeds of a sprawling drug-trafficking operation, demonstrating the growing problem of criminal organizations exploiting virtual assets.

Details of the alleged money-laundering scheme, which used the stablecoin Tether and the cryptocurrency exchange KuCoin, are outlined in a U.S. indictment made public last week.

American prosecutors allege that Mr. Wedding, a former Olympic snowboarder, and his co-conspirators used a “sophisticated Tether network” to break large amounts of money into smaller chunks, quickly moving the money through intermediary virtual currency wallets before it landed in a central Tether wallet controlled by Mr. Wedding.

The U.S. indictment showed large transactions amounting to hundreds of millions of dollars’ worth of Tether, which is pegged one-to-one to the U.S. dollar, moving between wallets controlled by Mr. Wedding and others. For example, between Aug. 15 and Sept. 7 of 2024, Mr. Wedding allegedly sent 564,571 Tether to buy approximately 300 kilograms of cocaine from Colombia.

Meanwhile, Rasheed Pascua Hossain, who is alleged to have managed and laundered the proceeds from Mr. Wedding’s drug trafficking, sent more than 200-million Tether to Mr. Wedding between April 29 and Oct. 8 of last year, according to the indictment. The FBI says Mr. Hossain, who was wanted for his alleged role, has been captured in recent days, though it did not release additional information.

None of the allegations in the documents have been tested in court.

A timeline of Ryan Wedding’s shift from Olympic snowboarder to alleged drug kingpin and FBI fugitive

Stablecoins, virtual currencies that are pegged to more stable assets like the U.S. dollar or commodity such as gold, have been in the spotlight since U.S. President Donald Trump signed the Genius Act into law last summer.

The U.S. legislation, which defines and regulates stablecoins, prompted Ottawa to release its own framework for the virtual assets following a budget announcement earlier this month.

How the alleged money

laundering worked

Documents filed by U.S. prosecutors detail how Ryan Wedding and several co-conspirators allegedly used tether (USDT), a stablecoin pegged to the U.S. dollar, to launder the proceeds of cocaine sales. Authorities allege that in order to obscure the source of the funds, members of the money-laundering network would use tether to break large amounts of money into smaller portions, then quickly move the money through intermediary tether wallets before the funds reached a hub tether wallet controlled by Mr. Wedding.

SELECTED TRANSACTIONS MADE IN 2024

Bianca

Canastillo-

Madrid

Between April 29, and Oct. 8:

Rasheed Pascua Hossain used a tether wallet to send 98.86% of its total funds, that is 207,808,779 USDT, to Ryan Wedding’s tether wallet.

Between June 14, and Oct. 1:

Rasheed Pascua Hossain sent 3,091,001.13 USDT to one of Bianca Canastillo-Madrid’s TRON wallets.

Between July 9, and Nov. 5:

Defendant Bianca Canastillo-Madrid received 507,078 USDT to her two TRON wallets from a tether wallet controlled by Andrew Clark.

Between July 12, and Sept. 11:

Bianca Canastillo-Madrid received 640,367 USDT to her two TRON wallets from Ryan Wedding’s tether wallet.

Between Aug. 15, and Sept. 7:

Ryan Wedding sent 564,571 USDT to an intermediary to purchase 300 kilograms of cocaine from defendant Wilson Riascos in Colombia.

How the alleged money laundering worked

Documents filed by U.S. prosecutors detail how Ryan Wedding and several co-conspirators allegedly used tether (USDT), a stablecoin pegged to the U.S. dollar, to launder the proceeds of cocaine sales. Authorities allege that in order to obscure the source of the funds, members of the money-laundering network would use tether to break large amounts of money into smaller portions, then quickly move the money through intermediary tether wallets before the funds reached a hub tether wallet controlled by Mr. Wedding.

SELECTED TRANSACTIONS MADE IN 2024

Bianca

Canastillo-

Madrid

Between April 29, and Oct. 8:

Rasheed Pascua Hossain used a tether wallet to send 98.86% of its total funds, that is 207,808,779 USDT, to Ryan Wedding’s tether wallet.

Between June 14, and Oct. 1:

Rasheed Pascua Hossain sent 3,091,001.13 USDT to one of Bianca Canastillo-Madrid’s TRON wallets.

Between July 9, and Nov. 5:

Defendant Bianca Canastillo-Madrid received 507,078 USDT to her two TRON wallets from a tether wallet controlled by Andrew Clark.

Between July 12, and Sept. 11:

Bianca Canastillo-Madrid received 640,367 USDT to her two TRON wallets from Ryan Wedding’s tether wallet.

Between Aug. 15, and Sept. 7:

Ryan Wedding sent 564,571 USDT to an intermediary to purchase 300 kilograms of cocaine from defendant Wilson Riascos in Colombia.

How the alleged money laundering worked

Documents filed by U.S. prosecutors detail how Ryan Wedding and several co-conspirators allegedly used tether (USDT), a stablecoin pegged to the U.S. dollar, to launder the proceeds of cocaine sales. Authorities allege that in order to obscure the source of the funds, members of the money-laundering network would use tether to break large amounts of money into smaller portions, then quickly move the money through intermediary tether wallets before the funds reached a hub tether wallet controlled by Mr. Wedding.

SELECTED TRANSACTIONS MADE IN 2024

Between April 29, and Oct. 8:

Rasheed Pascua Hossain used a tether wallet to send 98.86% of its total funds, that is 207,808,779 USDT, to Ryan Wedding’s tether wallet.

Between June 14, and Oct. 1:

Rasheed Pascua Hossain sent 3,091,001.13 USDT to one of Bianca Canastillo-Madrid’s TRON wallets.

Between July 9, and Nov. 5:

Defendant Bianca Canastillo-Madrid received 507,078 USDT to her two TRON wallets from a tether wallet controlled by Andrew Clark.

Bianca

Canastillo-

Madrid

Between July 12, and Sept. 11:

Bianca Canastillo-Madrid received 640,367 USDT to her two TRON wallets from Ryan Wedding’s tether wallet.

Between Aug. 15, and Sept. 7:

Ryan Wedding sent 564,571 USDT to an intermediary to purchase 300 kilograms of cocaine from defendant Wilson Riascos in Colombia.

Note: The image above represents a portion of the transactions depicted in the indictment.

Tether is the largest stablecoin, with a market cap of more than US$180-billion, according to CoinMarketCap.

“The reason that Tether is particularly useful is that it’s an analogue to the U.S. dollar,” said Amber Scott, co-founder and chairperson of anti-money-laundering consultancy firm Outlier Solutions Inc.

“I’m a big fan of it because I think that’s done incredible things in terms of financial inclusion, in terms of providing a hedge for people in economies where there’s been a collapse of currency or a lack of faith in banks or financial institutions,” Ms. Scott said. However, “for all of the same reasons that it’s incredibly useful for those use cases, it’s really useful for criminals,” she added.

Unlike cryptocurrencies, whose wildly fluctuating values make them ill-suited as a payment method, Tether’s value is relatively stable.

“Tether’s price stability, low fees, high liquidity and its near ubiquitous usage in crypto marketplaces make it a useful medium for many purposes, including moving value across borders quickly,” said Benjamin Bathgate, a partner at WeirFoulds LLP who co-chairs the firm’s blockchain and digital assets practice group.

Tether has faced scrutiny from the U.S. federal government, which, according to The Wall Street Journal, has investigated the company for possibly violating sanctions and anti-money-laundering rules.

Tether said in a statement Saturday that it condemns the use of stablecoins for illegal purposes and works with law enforcement to stop criminals.

“If anyone is considering using USDT [Tether currency code] for illicit purposes, think again: it is the most traceable asset in existence. With Tether, every action is online, every action is traceable, and every criminal can be caught,” the statement said.

Evidence against Ryan Wedding’s lawyer Deepak Paradkar comes from FBI witness

Opinion: Can Canada truly get its act together on money laundering?

However, David Coffey, a detective in the Toronto Police Service’s financial crimes unit, said it can be difficult for law enforcement to follow Tether transactions – “especially once they cash out in countries with weak regulation.”

The U.S. Treasury Department has imposed sanctions on Mr. Wedding and his alleged co-conspirators. Tether said it has frozen all of the virtual currency wallets linked to Mr. Wedding on the sanctions list.

According to blockchain analysis firm Chainalysis, Mr. Wedding’s wallets have indirect ties to Chinese chemical manufacturers, as well as close connections to wallets linked to cartels.

“This on-chain behaviour illuminates the connection between the laundering of drug proceeds and trusted Chinese chemical manufacturers, who provide everything from synthetic drug precursors to cutting agents that stretch out batches of cocaine,” Chainalysis said in an online post.

The alleged money-laundering operation also involved the Seychelles-based cryptocurrency exchange KuCoin. Rolan Sokolovski, one of Mr. Wedding’s alleged co-conspirators, used the platform to send and receive millions of dollars’ worth of Tether to and from other participants in the alleged scheme, prosecutors claim.

KuCoin did not respond to a request for comment.

Earlier this year, Canada’s anti-money-laundering watchdog issued a nearly $20-million penalty against Peken Global Ltd., the entity operating as KuCoin.

It was, at the time, the largest penalty ever issued by the Financial Transactions and Reports Analysis Centre of Canada, although less than a month later FinTRAC announced it had penalized another cryptocurrency firm, Xeltox Enterprises Ltd., an even larger sum of more than $176-million.

In 2022, the Ontario Securities Commission permanently banned KuCoin from the province’s capital markets and slapped it with a $2-million penalty for operating an unregistered virtual currency trading platform.

KuCoin pleaded guilty to one count of operating an unlicensed money transmitting business in the United States earlier this year, agreeing to pay more than US$297-million in penalties.