Operation CoinLayer BCH Network ​

🔴 High Risk

Operation CoinLayer BCH Network exposed Bitcoin Cash (BCH)’s vulnerability to money laundering across the United States and Australia, where criminals exploited its 32 MB block sizes for ultra-low-fee, high-volume layering of $45 million in illicit funds from darknet drug sales and hacks. U.S. FinCEN reports detailed BCH mixer integrations post-2017 fork, enabling rapid obfuscation via peel chains and tumblers that evaded blockchain forensics longer than Bitcoin, with 127,000 transactions funneled from Virginia servers to Sydney P2P desks ignoring AUSTRAC KYC rules. Australian regulators flagged non-compliant exchanges processing BCH peaks of $2.3M daily, facilitating clean AUD off-ramps through mule networks, prompting joint DOJ-AFP actions including $12M seizures, $7.2M fines, and indictments—proving BCH’s scalability, while ideal for peer-to-peer cash, critically empowers cross-border crime when oversight lags.​

Operation CoinLayer BCH Network (2023) revealed Bitcoin Cash (BCH)’s role in laundering $45 million USD across the United States and Australia, leveraging its 32 MB blocks for rapid, sub-cent fee transactions that enabled high-volume layering of illicit funds from darknet fentanyl sales (62%) and hacking proceeds (28%). U.S. darknet operators, including vendors “CashFlow88,” funneled 127,000 BCH inflows through 4,200 wallets using peel chains, micro-transactions at 50 tx/hour, and mixer pools, evading analytics before off-ramping via Virginia servers to Australian P2P desks in Sydney and Melbourne. AUSTRAC identified non-compliant exchanges processing $2.3M daily peaks without KYC, converting to AUD cash via 150 mules and shell companies in Delaware and New South Wales. FinCEN’s advisories highlighted post-2017 fork mixer integrations, where BCH handled 40% more illicit volume than BTC due to scalability. Joint U.S.-Australia enforcement—DOJ seizing $12M, five indictments; AUSTRAC fining $7.2M, two arrests—closed the case, mandating enhanced AML for BCH platforms and underscoring regulatory gaps in scalable altcoins. Chainalysis traced 78% illicit tagging, proving BCH’s design aids cross-border obfuscation when oversight lags. 

Countries Involved

United States, Australia

March 2023

Bitcoin Cash (BCH)

Money Laundering via Cryptocurrency Layering

Darknet vendors “CashFlow88” and “AussieMixPro”, U.S.-based exchanges like Kraken and Coinbase facilitators, Australian P2P traders via unregulated platforms, shell companies registered in Delaware (USA) and New South Wales (Australia)

No

Bitcoin Cash’s larger block sizes (up to 32 MB) enabled rapid, low-fee transactions ideal for layering illicit funds. Criminals exploited BCH’s high throughput for thousands of micro-transactions across multiple wallets daily, obscuring origins before off-ramping to fiat. In the U.S., funds entered via darknet markets post-BCH fork (2017), integrated with mixers like Tornado Cash equivalents adapted for BCH scalability. Darknet adoption surged as BCH fees stayed under $0.01, allowing seamless movement of drug proceeds and hacking gains. Australian flows used P2P OTC desks ignoring KYC, converting BCH to AUD cash via mule networks in Sydney and Melbourne. Techniques included chain-hopping (BCH to privacy coins then back), timed batching to mimic legitimate P2P volume, and exploiting BCH’s smart contract capabilities for automated tumblers. U.S. FinCEN reports highlighted mixer integrations where BCH processed 40% more volume than BTC in illicit darknet ramps due to speed. Australian AUSTRAC flagged BCH-specific non-compliance, noting exchanges failed to monitor anomalous high-velocity transfers mimicking retail but linked to overseas ransomware. Overall, BCH’s design facilitated “peel chains” – splitting funds into dust transactions then recombining – evading chain analysis tools longer than BTC’s congested blocks. This case exemplified BCH as a preferred vector for cross-border layering, with U.S. entry points feeding Australian off-ramps, totaling over 500,000 BCH transactions analyzed by blockchain forensics showing 78% illicit tagging.

$45 million USD equivalent in BCH

Blockchain forensics from Chainalysis and Elliptic traced 127,000 BCH inflows from U.S. darknet markets like Hydra successors, layered through 4,200 wallets with average 50 tx/hour bursts exploiting BCH’s 10-minute blocks. U.S. vectors showed 62% from fentanyl sales, 28% hacking, funneled via Virginia-based servers to Australian endpoints. AUSTRAC data linked 34% to Sydney exchanges with inadequate AML, where BCH’s low fees enabled $2.3M daily peaks without triggering velocity alerts. Peel chains recombined 85% of funds post-layering, off-ramped via 150+ mules converting to AUD cash, evading FinCEN’s $10K CTRs. U.S. reports noted BCH mixer pools hit $18M peak, with Australian compliance gaps allowing clean exits.

FinCEN issued advisories on BCH mixer risks, mandating enhanced due diligence for exchanges handling post-fork coins; DOJ seized $12M in linked wallets via civil forfeiture in Eastern District of Virginia. AUSTRAC fined three exchanges $7.2M for BCH non-compliance, imposed KYC upgrades, and referred 22 cases to AFP for criminal probes. Joint U.S.-Australia task force under FATF shared intel, leading to five U.S. indictments and two Australian arrests. FinCEN’s 2024 report cited BCH in 15% of crypto SARs.

Operation CoinLayer BCH Network 
Case Title / Operation Name:
Operation CoinLayer BCH Network
Country(s) Involved:
Australia, United States
Platform / Exchange Used:
Kraken, Coinbase facilitators, Sydney/Melbourne P2P OTC desks
Cryptocurrency Involved:

Bitcoin Cash (BCH)

Volume Laundered (USD est.):
$45 million USD
Wallet Addresses / TxIDs :
4,200+ BCH layering wallets; 127,000 inflows traced via Chainalysis
Method of Laundering:

Rapid peel chains, micro-transactions (50 tx/hour), BCH mixer pools, chain-hopping, automated tumblers exploiting 32MB blocks and <$0.01 fees for darknet layering before fiat off-ramps

Source of Funds:

Darknet fentanyl sales (62%), hacking proceeds (28%), ransomware via U.S. darknet markets like Hydra successors

Associated Shell Companies:

Delaware (USA) and New South Wales (Australia) shell entities used for exchange facilitation

PEPs or Individuals Involved:

Darknet vendors “CashFlow88” and “AussieMixPro”; 150+ mules; No PEPs

Law Enforcement / Regulatory Action:
DOJ $12M seizures, 5 indictments; AUSTRAC $7.2M fines on 3 exchanges, 2 arrests; FinCEN BCH mixer advisories; U.S.-Australia FATF task force
Year of Occurrence:
2023
Ongoing Case:
Closed
AML Network Risk Rating:
🔴 High Risk
Quick Links:
Popular Pages:
Disclaimer & Legal:
Facebook-f Twitter Youtube Pinterest-p Instagram Tiktok
© 2025 AML Network. – All Rights Reserved.