Crypto Broker Sentenced to 160 Months in US Drug-Money Laundering Case

Crypto Broker Sentenced to 160 Months in US Drug-Money Laundering Case

by | Oct 23, 2026 | News

A crypto broker sentenced to 160 months in federal prison on October 21, 2026, was tied by prosecutors to the laundering of roughly $14.5 million in narcotics proceeds via Tether's USDT and a plot to import cocaine. Leonardo de Jesus Zuluaga Duque, 63, a Colombian known as "Rey," received the sentence in the Southern District of New York, where prosecutors said he held a supervisory role in a cross-border laundering network.

The case shows how stablecoin transfers can serve as one link in a laundering chain that still depends on shell companies, dollar conversions and conventional bank accounts. Prosecutors said the network moved value from Colombia into the US financial system and back, ending with pesos distributed to the original participants.

Sentence and forfeiture terms

US District Judge Mary Kay Vyskocil imposed the 160-month term on October 21, 2026, according to Crowdfund Insider and TOKENPOST. The sentence works out to 13 years and four months in prison.

Beyond prison time, the court ordered five years of supervised release for Zuluaga Duque and a forfeiture of $14,751,846, along with cryptocurrency previously held in four addresses under his control. The forfeiture order is separate from the roughly $14.5 million in Tether transactions attributed to the group, and combining the two figures would overstate the proceeds described in the case.

How the laundering network moved funds

Between May and November 2023, Zuluaga Duque worked with several associates to move about $14.5 million in drug proceeds through the network. Drug money was converted into USDT in Colombia, transferred to an American intermediary and exchanged for US dollars, according to prosecutors.

Those dollars then moved through US-based shell companies before returning to Colombian businesses, where the funds were converted into pesos and distributed. The token transfer was only one part of the route, which also relied on companies, currency conversion and banking access.

The structure made any single record incomplete on its own. Monitoring a blockchain address would not necessarily explain the commercial purpose of a related bank transfer, while a bank record might identify the receiving company without revealing the earlier token movement, so reconstructing the full route required connecting both sides.

The US intermediary and co-defendants

At the heart of the US side of the scheme stood Maximilien de Hoop Cartier, an Argentine national who claimed ties to the Cartier jewelry dynasty. Prosecutors said Cartier ran a money-transmitting operation in cryptocurrency without a license, using firms he portrayed to banks as genuine technology businesses.

Cartier's operation transmitted more than $470 million in illicit proceeds, a sum far larger than the roughly $14.5 million tied directly to Zuluaga Duque. Cartier previously pleaded guilty in a related matter and received an eight-year sentence.

Crowdfund Insider reported that Erica Milena Lopez Ortiz assisted with moving the USDT, while the returning dollar payments went to Colombian firms belonging to Felipe Estrada Echeverry. Sentences have now been handed down for each of the five co-defendants, with prison terms spanning three to eight years.

Cocaine conspiracy and arrest

Investigators also connected Zuluaga Duque to a plan to import cocaine into the US. Confidential sources directed by law enforcement set up a deal in November 2023 for approximately nine kilograms of cocaine paste, which prosecutors said was intended to be processed into cocaine before delivery to New York state.

According to the case account, the narcotics were handed to an undercover officer by Adrian Fernando Areiza Ceballos, and Zuluaga Duque took a commission for his part in arranging the transaction. The operation continued into February 2024, when investigators arranged a prospective purchase of roughly 100 kilograms of cocaine paste, and Colombian police later executed search warrants that recovered about 111 kilograms.

On April 30, 2024, police in Colombia took Zuluaga Duque and fellow defendants into custody in Medellín, with Interpol assisting. Colombia's Supreme Court backed sending him to the US to face charges, and Colombian authorities approved his extradition in early 2025 following a US request, according to earlier reports.

Investigation and what the crypto broker sentenced signals

According to US Attorney Jamie McDonald, the defendants combined cryptocurrency with shell companies and ordinary banking services to shift criminal proceeds across international borders. The case was investigated by IRS-Criminal Investigation, the FBI's New York Field Office and Homeland Security Investigations' New York El Dorado Task Force, with assistance from Colombian National Police and other international partners, according to Crowdfund Insider.

In the government's telling, the wider enterprise ran hundreds of millions of dollars in drug proceeds and other criminal funds through the US financial system by exploiting cryptocurrency, shell companies on both sides of the border and multiple crypto accounts. The Department of Justice singled out USDT by name as the main mechanism for moving the illicit funds, rather than describing crypto in general terms, Crypto Briefing reported.

The case illustrates how cryptocurrency transfers can form one part of a broader laundering process: USDT moved value across borders, but dollar conversions, shell companies and conventional bank accounts were indispensable to turning that value back into spendable Colombian pesos. Whether any exchange or wallet provider could face enforcement over the network remains an open question, because the reported announcement does not address it.

Conclusion

Zuluaga Duque's 160-month sentence closes the case against all six defendants, with the five co-defendants receiving terms of three to eight years. He must also serve five years of supervised release and surrender $14,751,846 plus cryptocurrency held in four addresses he controlled. The next concrete step is his transfer into federal custody to begin serving the term, followed by the supervised release period that begins after his release from prison.

Frequently Asked Questions

Who is Leonardo de Jesus Zuluaga Duque, the broker known as 'Rey'?

Zuluaga Duque is a 63-year-old Colombian cryptocurrency broker who used the alias "Rey." Prosecutors said he held a supervisory role in an international network that laundered drug proceeds through Tether's USDT, shell companies and US banking channels between Colombia and the United States.

How long is Zuluaga Duque's 160-month prison sentence?

The 160-month term equals 13 years and four months in federal prison. US District Judge Mary Kay Vyskocil imposed the sentence on October 21, 2026, in the Southern District of New York, and Zuluaga Duque must also serve five years of supervised release after his prison term.

How much money did the network launder through Tether's USDT?

Prosecutors attributed approximately $14.5 million in Tether transactions to Zuluaga Duque and his associates between May and November 2023. The broader unlicensed money-transmitting business run by intermediary Maximilien de Hoop Cartier transmitted more than $470 million in illicit proceeds.

What was Maximilien de Hoop Cartier's role in the laundering scheme?

Cartier, an Argentine citizen who claimed ties to the Cartier jewelry dynasty, operated an unlicensed cryptocurrency money-transmitting business that converted USDT into US dollars and routed them through US entities he controlled. He previously pleaded guilty in a related matter covering more than $470 million and received an eight-year sentence.

What cocaine charges were tied to Zuluaga Duque's case?

According to prosecutors, Zuluaga Duque took a commission for his role in setting up a November 2023 deal for roughly nine kilograms of cocaine paste intended for processing and delivery to New York. A later negotiation for roughly 100 kilograms led Colombian police to execute search warrants that recovered about 111 kilograms.

Sources

BIS Paper Finds Banks Can Slow Stablecoin Adoption by Raising Deposit Rates

BIS Paper Finds Banks Can Slow Stablecoin Adoption by Raising Deposit Rates

by | Oct 19, 2026 | Adoption

Banks may already hold a counterweight against stablecoins such as USDT and USDC: the interest paid on an ordinary savings account. That is the conclusion of a working paper released by the Bank for International Settlements on October 13, 2026, titled "Are stablecoins and bank deposits substitutes?" and issued as BIS Working Paper 1382 by Rashad Ahmed and Iñaki Aldasoro, according to Crypto Briefing.

The finding matters because it reframes the contest between banks and stablecoins as a pricing problem rather than a technology race. Reserve-backed stablecoins function as partial stand-ins for conventional deposits, the paper concludes, meaning the two products compete for the same pool of money, and that deposit pricing gives banks a degree of control over how quickly stablecoins spread.

What the Stablecoin Adoption Data Shows

The study drew on weekly U.S. figures covering January 2019 to June 2025. Aldasoro, a BIS economist, and Ahmed, of the Andersen Institute for Finance and Economics, determined that stablecoin expansion decelerates whenever banks lift what they pay depositors. That window covers a dramatic stretch for the sector, with stablecoin market capitalization climbing from less than $5 billion to more than $220 billion, Crypto Briefing reported.

Across the sample, stablecoin market cap grew roughly 15% over a typical 10-week stretch, the baseline against which the rest of the findings should be read. The central estimate shows that a single basis point added to deposit rates corresponds to about 3 percentage points shaved off stablecoin market cap growth across a 10-week span. A basis point is one hundredth of a percentage point, and the 3 percentage point figure comes from the authors' ordinary least squares estimates, Crypto Briefing reported.

Using instrumental variables estimates instead, the measured effect rises to about 9 percentage points. Decrypt and kucoin framed the same result in growth terms: a one-basis-point rise in deposit rates, sizable for savings rates that typically move slowly, trimmed average ten-week growth from about 15% to roughly 12% under the baseline estimate, and to about 6% under a second method designed to isolate cause and effect. In both cases, growth slowed but did not reverse, CryptoNews reported.

USDC More Exposed Than USDT

USDC absorbed the heavier blow, losing roughly 4.8 percentage points of growth for every basis point added to deposit rates, according to Crypto Briefing. USDT, by comparison, showed a reaction of 1.9 percentage points.

The authors attributed the difference to USDC's closer ties to U.S. users, a pattern they said was consistent with Circle's USDC being more integrated with the domestic banking system. The relationship was stronger for Circle's USDC than Tether's USDT, Decrypt and CryptoNews reported.

The pattern extended beyond tokens sitting in wallets. Stablecoins supplied to decentralized finance protocols showed the same sensitivity, while non-stablecoin crypto assets displayed no comparable response, with bank deposit rates having no significant effect on them, Crypto Briefing reported.

The 3% Threshold and the Rate Environment

The wider interest-rate backdrop adds another layer to the results. Above a federal funds rate of roughly 3%, the authors identified a nonlinear effect, Crypto Briefing reported. Savings rates barely move until the policy rate crosses about 3%, after which banks reprice them far more quickly, according to Decrypt and kucoin.

Near-zero rates leave depositors and stablecoin holders earning essentially the same thing: nothing. As rates climb, the spread between a yield-bearing deposit and a token that pays nothing grows too wide to dismiss, Crypto Briefing reported. The authors used that pattern in bank behavior to distinguish causation from coincidence, according to kucoin.

The sample stretches from the era of rock-bottom rates through the subsequent tightening cycle, a stretch during which the stablecoin sector expanded more than fortyfold. The research summary describes the mechanism as a pricing channel through which the banking industry can influence stablecoin demand, Crypto Briefing reported.

GENIUS Act Limits Issuer Response

The dynamic is now being codified into law. President Donald Trump signed the GENIUS Act in July of last year, a measure that effectively made stablecoins legal in the United States and laid down rules governing how they are issued, used and held in custody, according to Decrypt and kucoin.

The law includes a specific provision in Section 4(a)(11) stating that no permitted payment stablecoin issuer or foreign payment stablecoin issuer shall pay holders any form of interest or yield solely in connection with holding, using, or retaining a payment stablecoin, Forkast News reported. The rules take effect January 18, 2027, leaving issuers unable to match bank deposit rates head-on.

The prohibition applies only to the issuers themselves. Crypto exchanges and third-party platforms remain free to pay interest on stablecoins held on their platforms, creating a bifurcated market where the yield is decoupled from the underlying asset's issuance, Forkast News reported. Meanwhile, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Treasury are writing rules to implement the GENIUS Act, according to kucoin.

Limits of the Research and What Comes Next

The BIS authors are explicit about the limits of what they can claim: the work does not establish losses of deposits or lending, and its sample covers a single high-rate episode, so the findings describe one rate cycle rather than a law of the market, according to CryptoNews and Forex Crunch. Working papers reflect the authors' views, not necessarily the BIS's, and the sample spans a single high-rate cycle in which stablecoins paid holders no interest, Decrypt and kucoin reported.

The authors said regulators should weigh whether stablecoin issuers may pay holders yield, along with the trade-offs of requiring issuers to keep part of their reserves in bank deposits, according to Decrypt and kucoin. Banks have lobbied to prohibit stablecoin yield, and the dispute was prominent during the Clarity Act's failed Senate vote, kucoin reported.

The scale of the potential substitution has been flagged before. Bank of America CEO Brian Moynihan warned in January that as much as $6 trillion in deposits could move into stablecoins and related products offering returns, potentially reducing lending capacity and raising borrowing costs, according to CryptoNews and Forex Crunch. A December Federal Reserve staff analysis explained that money placed in stablecoins can return to banks as issuer deposits, changing who supplies banks' funding even when total deposits remain unchanged, CryptoNews reported.

For policymakers, the research summary notes that stablecoin adoption may be closely linked to the interest rates banks offer savers, and that the relationship carries implications for both monetary policy and regulation, Crypto Briefing reported. The next datapoint is the deposit-rate response: how quickly banks in major markets reprice savings products as policy rates shift, and whether stablecoin issuer yields widen or narrow the gap, according to Forex Crunch.

Conclusion

The established finding is narrow but pointed: higher bank deposit rates predict slower stablecoin market growth, the effect is stronger for USDC than USDT, and banks retain influence over adoption through deposit pricing. The paper does not show that stablecoins have reduced bank deposits or lending, and its sample covers one high-rate cycle. The next concrete steps are regulatory: the OCC, FDIC and Treasury are writing rules to implement the GENIUS Act ahead of its January 18, 2027 effective date, while the authors say regulators should weigh whether issuers may pay yield and the trade-offs of requiring reserves to sit in bank deposits.

Frequently Asked Questions

What did BIS Working Paper 1382 find about stablecoins and bank deposits?

The paper, published October 13, 2026 by Rashad Ahmed and Iñaki Aldasoro, found that stablecoins and bank deposits behave as partial substitutes. A 1 basis point rise in U.S. deposit rates lined up with roughly 3 percentage points less stablecoin market cap growth over 10 weeks, and about 9 points under instrumental variables estimates.

Why is USDC more sensitive to deposit rate increases than USDT?

USDC lost about 4.8 percentage points of growth per basis point of deposit repricing, versus 1.9 points for USDT. The authors attributed the gap to USDC's closer ties to U.S. users and institutions, suggesting the more integrated a stablecoin is with the domestic banking system, the more sensitive it is to that system's yields.

How does the GENIUS Act affect stablecoin issuers' ability to compete with banks?

Section 4(a)(11) of the GENIUS Act, signed in July 2025 and effective January 18, 2027, bars permitted payment stablecoin issuers from paying holders any interest or yield for holding their tokens. Exchanges and third-party platforms remain free to pay interest on stablecoins held on their platforms.

Does the BIS paper prove stablecoins drain bank deposits or lending?

No. The authors state the work does not establish losses of deposits or lending, only a correlation in growth patterns. The sample covers a single high-rate episode between 2019 and 2025 in which stablecoins paid holders no interest, so the findings describe one rate cycle rather than a permanent law.

What did Bank of America CEO Brian Moynihan warn about stablecoins?

Moynihan warned in January that as much as $6 trillion in deposits could move into stablecoins and related products offering returns, potentially reducing banks' lending capacity and raising borrowing costs. The BIS paper suggests that outcome is not fixed if banks reprice deposits competitively.

Sources

A look at the new order passed to urge Tether to keep a track of USDT

A look at the new order passed to urge Tether to keep a track of USDT

by | Oct 15, 2022 | Tether

There have been various such illicit activities in the crypto industry that have brought the whole market under scrutiny and investigation. One such instance presented itself in recent times that lead to a New York judge passing a judgment asking Tether to keep a track of all the USDT. This article endeavors to elaborate upon this aspect in detail to provide users with all the necessary information they need.

To begin with, in this particular case so far the court has agreed to provide the plaintiff with the documents that can be of high importance in the further stages.

What has the judge ordered Tether?

In the recent ongoing case, Tether has been firmly ordered to come up with proper records of how it has been backing its stablecoin. USDT. Certain documents have been demanded by the court for further investigation into the matter. These documents include the following:-

• General ledgers

• Balance sheets

• Statements citing income

• Statements indicating cash flow

• Statements showing the data of all the profits earned and losses incurred.

This order came into light quite recently and was an out one of a case that was brought into trial almost three years ago,i.e in the year 2019.

What was the initial complaint about?

In the beginning, when the complaint was brought to the attention of the court, in the year 2019, it was done by a group of investors against iFinex, tether, and Bitfinex's parent company. They had charged this company with the allegation that it had intentions of affecting the crypto market negatively by releasing unbacked stablecoin into the market. They said it was a cunning step taken by the company to adversely affect other cryptocurrencies and inflate the prices of some such as Bitcoin.

What were the steps taken by the judge?

The judge presiding over this matter, Judge Polka Failla took some important steps in this matter. At first, it dismissed the pleas made by iFinex. As per the judge, the documents provided by the organization were enough and based on these documents iFinex appeal to block order was also not granted. She also accepted the request of the plaintiff to be provided with necessary documents for this could help further with the case.

What were the consequences of the case?

In a much more recent judgment passed by Judge Polka Failed, she decided to dismiss all the charges brought against iFinex. It was a step taken considering and following the regulations made under Corrupt Organizations Act. There were various allegations brought against IFinex such as making use of proceedings that are a result of racketeering to utilize them in investments. This decision was taken by the judge in September the year 2021. After that many such judgments have also been passed on this particular issue.

In one such hearing, conducted in February, IFinex gave into the decision to pay a sum of 18 million dollars for the damages it had caused to New York. It was also asked to submit timely proceedings of all its reserves as well as put an end to the services it offered to its customers. This decision was reached after a thorough and detailed investigation that went on for almost twenty-two months.

Conclusion

The crypto market is not free from vices and illegal activities. Those who fall into a pit of it get too caught up in it and it becomes difficult for them to retrieve their previous status in the market. It can also lead them to a fall from which revival is almost impossible.