Digital Currency Betrays Growing Money Laundering Problem

The man who heads the world's largest money manager expressed the view Tuesday that the rise of digital currencies reflects how much money laundering is going on.

Larry Fink, CEO of BlackRock, told the media "It's much more of a speculative platform for Asia and it's heavily used for money laundering."

South Korean, Japanese and, until last month, Chinese investors, are major traders of the largest digital currencies by market cap, bitcoin and ethereum.

Officials in the States have repeatedly shut down online marketplaces in the part of the internet known as the dark web, where illegal goods are sold and money laundering often occurs. Transactions on those websites often occur in bitcoin or other digital currencies in an attempt to preserve anonymity.

Just this summer, the U.S. Justice Department and Europol announced the closure of AlphaBay and Hansa, the two largest dark web marketplaces at the time. A grand jury in the U.S. District Court for the Northern District of California also charged Russian national Alexander Vinnik and the digital currency exchange he allegedly operated, BTC-e, with money laundering and related crimes.

For his part, Fink joins a number of major Wall Street executives who have spoken on digital currencies in the last several weeks.

JPMorgan Chase CEO Jamie Dimon called bitcoin a "fraud" and warned that if digital currencies grow too large, governments will close them down. On the other hand, Morgan Stanley CEO James Gorman said cryptocurrencies are "certainly something more than just a fad" and authorities may actually need to adapt to the growth of the digital currencies.