Just tap to launder: How crypto has helped hundi go digital
Ordinary Bangladeshis are unknowingly participating in a vast, unregulated crypto-based money-laundering network as authorities struggle to crack down
Once I met one of my distant relatives at my village who works at a small electronics shop, and every month he sends money to his brother in Dubai. "I use Binance," he said with a grin, as if he had found a clever shortcut the rest of us were too slow to understand.
That was the first time I had heard of Binance, so I asked him, "How does it work?"
He broke it down for me step by step, as if he were teaching me a life hack.
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First, he takes cash from customers at the shop and deposits it into his personal mobile financial services (MFS) accounts, small amounts at a time, so nothing looks suspicious. Then, when the balance is high enough, he logs into Binance and goes straight to the P2P marketplace. There, he picks a seller offering USDT — a cryptocurrency stablecoin pegged to the US dollar — at a good rate.
"Very simple," he said, tapping his phone. He sends the money from his MFS account to the seller's MFS or bank account, and within moments, the seller transfers the same amount in USDT to his Binance wallet. He never pauses to wonder who that seller is or where their money comes from.
Once he has the USDT, the rest is effortless. He opens a chat window with his brother in Dubai, asks for his Binance wallet address, and transfers the crypto directly. No bank, no remittance channel, no compliance check.
"It's five minutes of work," he said proudly. His brother then cashes out through another P2P trader in Dubai, receiving dirhams in hand — unrecorded, untaxed, untraceable.
He had no idea that this was illegal or that each transfer he made was technically money laundering under Bangladeshi law. And when I informed him, he looked indifferent.
Binance is one of the most widely used platforms for buying and selling virtual assets, and is currently the world's most popular cryptocurrency exchange. Registered in the Cayman Islands in 2017, it was founded by Changpeng Zhao, a Chinese national.
"Cryptocurrency works in such a way that sending money is almost like sending an email. Just as someone can email you instantly from anywhere, someone can also transfer money to you in the same way — except with crypto, the money has no physical existence. Now, you can block email if you want. But if I use a VPN or rely on P2P systems, I can still send and receive emails. The same applies to cryptocurrency and crypto trading."
- Professor BM Mainul Hossain, director, Institute of Information Technology, Dhaka University
Binance's primary currency is USDT, which has also become the most popular medium of exchange among crypto traders because its value remains equivalent to the US dollar at all times. Even when the value of other cryptocurrencies fluctuates, USDT remains pegged to the dollar, which is why it has gained such widespread use.
TBS spoke to a crypto trader (name withheld) who explained how the system works.
He explained, "Let's say you want to send dollars abroad via Binance. You have the money in a currency other than dollars. You need a cryptocurrency to transfer. So you log into Binance and use the P2P (peer-to-peer) option. Through P2P, you can buy crypto using bank transfers to the agent or via bKash, Nagad, or Rocket."
He added, "The way it works is when you buy, you make the payment first. Binance keeps the crypto safely in escrow, so the seller can't run away with your money. When you're selling, you receive the money first, and then you transfer the crypto. No one has the ability to move the crypto without authorisation because it remains locked inside Binance until the transaction is completed. There's a time window within which the transaction must be done — that's a key feature.
"So imagine you buy, say, Tk10 lakh worth of USDT on Binance," he continued. "After buying it, you can send it to any country. It's very much like hundi. Suppose I have some USDT in my Binance wallet right now. If you give me your wallet or email, I can transfer the funds to you instantly. You can cash it out in any country. It works like hundi, and the Bangladesh government can't really stop it," the trader further said.
In 2023, the Criminal Investigation Department (CID) uncovered a network behind this operation. Hundreds of crores of taka have been transacted through mobile financial services, with more than Tk25 crore moved through a single mobile number.
Bangladesh declared Bitcoin transactions illegal in 2014. Yet, at present, there are an estimated four million cryptocurrency users in Bangladesh.
To convert cryptocurrency into local currency, traders frequently use personal bank accounts and MFS accounts. Evidence shows that some MFS agents and private users are involved in these illegal operations using both authorised and unauthorised SIM cards.
According to CID, various forms of cryptocurrency or virtual currency are being used in gambling, hundi, smuggling and cyber extortion. Despite frequent crackdowns, the illegal networks continue to operate.
But how to prevent this untraceable system?
Professor BM Mainul Hossain, director of the Institute of Information Technology (IIT) at Dhaka University, said, "Cryptocurrency works in such a way that sending money is almost like sending an email. Just as someone can email you instantly from anywhere, someone can also transfer money to you in the same way — except with crypto, the money has no physical existence. It's entirely digital.
"Now, you can block email if you want. The government could even announce that Gmail or email services are banned in Bangladesh. But if I use a VPN or rely on peer-to-peer (P2P) systems, I can still send and receive emails. The same applies to cryptocurrency and crypto trading," he added.
That is the real issue. As long as the internet exists, even if the government bans crypto, people will continue trading, as there is no central authority controlling it.
Chief Adviser's Special Assistant for Posts, Telecommunications, and Information Technology Ministry Faiz Ahmad Taiyeb said, "Incidents of money laundering through cryptocurrency have indeed come to light, and we have found some traces of it. For example, a crypto platform was using the Application Programming Interface (API) that a local bank used to connect to the NID server. Once we detected its existence and warned the NID authorities, they stopped sharing that API. However, it is still possible that similar proxy APIs are being used.
"There is also concern that crypto may be used to move funds from online gambling accounts or other accounts where suspicious financial transactions take place. In this regard, Bangladesh Bank and the BFIU need to remain alert," he added.
"Bangladesh Bank might also consider creating a stablecoin for authorised domestic transactions, where such a system could be beneficial. This is something worth exploring in the future. Even so, as the matter ultimately falls under the responsibility of the Bangladesh Bank as the financial regulator, I believe an official response or initiative is required from them. Personally, we have done what we could by alerting the NID team so that their APIs are not misused in such activities and that they remain vigilant," he further said.
Money laundering through cryptocurrency has become a global headache for regulators, as criminals exploit the speed, anonymity and borderless nature of digital assets. Over the past two years alone, at least $28 billion in illicit funds has flowed into major crypto exchanges, according to a global investigation by the International Consortium of Investigative Journalists and The New York Times.
Hackers, scam networks, cybercriminal groups in North Korea, and transnational fraud syndicates routinely use exchanges such as Binance, OKX and Bybit to wash stolen or extorted money.
Globally, regulators are no longer trying to ban cryptocurrency outright. Instead, they focus on controlling the platforms where digital money meets the real financial system. The intergovernmental organisation Financial Action Task Force (FATF) now requires all countries to regulate Virtual Asset Service Providers (VASPs) — exchanges, P2P platforms and wallet services — through strict KYC, transaction reporting, and cross-border information sharing.
Regions like the EU, the UK, and the UAE already enforce these rules. The EU's MiCA framework mandates full transparency from exchanges, while the UK requires platforms to freeze suspicious transfers. Even countries in the Gulf — Dubai, Abu Dhabi, and Bahrain — now require crypto businesses to register, maintain capital reserves and follow AML protocols.
But as long as the regulatory gap remains, criminals will continue to exploit the blind spots — while ordinary people, like the young man sending money to his brother in Dubai, remain unknowingly entangled in a system far bigger than they realise.
