CloakCoin

CloakCoin, launched in 2014, is a privacy-focused cryptocurrency designed to offer fast, secure, and fully anonymous transactions through advanced encryption technologies like ENIGMA. Its core promise of privacy and untraceability, coupled with scarcity in circulation, positions it as an attractive tool for legitimate privacy-seeking users; however, these very features have also made CloakCoin a preferred medium in illicit money laundering schemes globally. Criminal actors exploit CloakCoin’s sophisticated privacy mechanisms to conceal the origin and flow of illicit funds, effectively evading detection by law enforcement and financial regulators. This exploitation allows illicit proceeds from fraud, cybercrime, and sanction evasion to be layered and integrated into the financial system with minimal traceability. As such, CloakCoin epitomizes the dual-use challenge of privacy coins in the cryptocurrency ecosystem—offering robust privacy rights for individuals while simultaneously enabling significant money laundering and financial crime risks on a global scale. Regulatory and enforcement agencies recognize these challenges and have intensified efforts to curb abuse of CloakCoin and similar privacy-centric cryptocurrencies through sanctions, investigations, and calls for stronger international cooperation.

CloakCoin, a privacy-enhancing cryptocurrency, has been repeatedly exploited in global money laundering operations to obscure illicit proceeds from fraud, sanction evasion, and other criminal enterprises. Its privacy protocol makes transactions difficult to trace, allowing criminals to layer and integrate illegally obtained funds into the global financial system with fewer chances of detection. Criminal networks have combined CloakCoin’s features with other laundering tools, including cryptocurrency mixers and shell companies spanning multiple jurisdictions, to create complex laundering chains. The use of cryptocurrency mining operations as a façade to legitimize illicit inflows has further complicated enforcement efforts. Enforcement agencies across the world have taken measures to dismantle these networks, impose sanctions, and strengthen regulations targeting privacy coins and related services. Despite advances in blockchain forensics, CloakCoin remains a significant tool in the broader ecosystem of crypto-enabled money laundering globally.

Countries Involved

Global (including but not limited to Cambodia, Singapore, British Virgin Islands, Cayman Islands, Laos, Texas USA, and other offshore jurisdictions)

Date Discovered / Reported

Various investigations and reports indicate activity discovered and reported intermittently from 2018 through 2025, with significant exposés around 2024-2025.

Cryptocurrency Involved

CloakCoin, Bitcoin, other privacy coins

Type of Crime

Money laundering through obfuscation of illicit proceeds using cryptocurrency mixing, layering, and cross-border transfers; linked also to fraud, cybercrime, and sanction evasion.

Entities Involved

A network of offshore shell companies, cryptocurrency miners, exchange platforms, layered wallets, and individuals linked to fraud and sanctions evasion operations—also including entities using CloakCoin as an anonymizing tool.

PEP Involvement

Yes. Politically Exposed Persons (PEPs) and high-net-worth sanctioned elites have been linked through networks enabling laundering via CloakCoin and other cryptocurrencies to conceal illicit financial flows.

Laundering Techniques Used

CloakCoin’s inherent privacy features were exploited alongside cryptocurrency mixers (“tumblers”), extensive wallet hopping, cross-chain bridge transfers, and layering through multiple offshore corporate structures. The use of mining operations as a cover for illicit fund inflows was another technique, disguising laundering behind purported mining revenues. Shell companies falsely declared transaction origins to facilitate layering and integration into the financial system.

Estimated Value Laundered

Estimated in the multiple hundreds of millions USD, with tens of millions moved through CloakCoin and related mixes alone; total laundering involving CloakCoin-linked networks likely in the scale of billions when combined with Bitcoin and other cryptocurrencies as parts of the scheme.

Transaction Analysis Summary

CloakCoin transactions showed patterns of obfuscation including rapid wallet hops and mixing with other privacy coins to hide the true source of funds. Timing and volumes often aligned suspiciously with fraudulent activity proceeds, with layered transactions involving exchanges and mining platform wallets. Network analysis revealed laundering pathways spanning multiple jurisdictions, exploiting legal and regulatory gaps in crypto oversight globally.

Regulatory/Enforcement Actions Taken

Multiple sanctions and designations by the U.S. Treasury Department’s OFAC, international law enforcement crackdowns involving Europol, U.S. Homeland Security, and multiple national financial intelligence units. Closure or blacklisting of accounts related to CloakCoin laundering entities and seizure of assets. Ongoing investigations into shell companies involved in these laundering schemes, with heightened calls for regulatory reform around privacy coins including CloakCoin.

Links to Reports / Sources

Case Title / Operation Name:

CloakCoin Money Laundering Network

Country(s) Involved:

Cambodia, Laos, Singapore, United States

Platform / Exchange Used:

Various crypto exchanges and mixers, including offshore platforms and mining operations

Cryptocurrency Involved:

CloakCoin, Bitcoin, other privacy coins

Volume Laundered (USD est.):

Hundreds of millions USD; potentially billions when combined with related schemes

Wallet Addresses / TxIDs :

Multiple layered wallet addresses involved; specifics undisclosed due to privacy nature

Method of Laundering:

Use of CloakCoin privacy features, mixers/tumblers, layering, wallet hopping, offshore shell companies

Source of Funds:

Fraud, cybercrime, sanctions evasion, illicit proceeds disguised via mining revenues

Associated Shell Companies:

Offshore shell companies in Cambodia, BVI, Cayman Islands, Singapore, Laos

PEPs or Individuals Involved:

Politically Exposed Persons (PEPs) and sanctioned elites utilizing CloakCoin networks

Law Enforcement / Regulatory Action:

OFAC sanctions, Europol investigations, US Treasury actions, asset seizures

Year of Occurrence:

2018–2025 (ongoing exposures and investigations)

Ongoing Case:

Ongoing

AML Network Risk Rating:

🔴 High Risk