Money Laundering Infiltrates Music Streaming; Spotify and Twitch Are Other Paths

In addition to YouTube, with its Super Chat and Super Stickers tools, Spotify and Twitch are two other streaming platforms that criminals leverage to launder money from their illicit activities.

While governments in various countries have been pursuing the criminal networks behind this money laundering for at least six years, in Mexico, they have received little attention.

A recent case is that of Ricardo Hernández Medrano, known as “El Makabélico,” a rapper linked to the Cartel del Noreste, formerly Los Zetas, who was sanctioned by the United States Department of the Treasury because his concerts and performances were used to launder dirty money, and 50% of his royalties on streaming platforms went directly into the coffers of said criminal group.

Furthermore, in December 2023, a journalistic investigation in Sweden revealed that criminal groups were buying bitcoins with cash through Facebook groups. The cryptocurrency was then used to inflate the revenue of artists by paying for fake music streams on Spotify, either through plays created by bots pretending to be users or through hacked accounts. More plays mean higher real payments from the platform, in the form of clean money.

In another case uncovered in Turkey in 2022, criminals used stolen credit cards to donate Bits (Twitch currency that can be purchased with real money) to streamers, who in turn received clean payments in Twitch money and then returned a sum to the criminals, pocketing a portion.

Some streamers earned up to $1,800 per day, despite having only 40 or 50 viewers.

With global authorities monitoring money laundering, organized crime has been evolving and seeing digital platforms, in this case music and video streaming platforms, as a way to launder funds or make payments to content creators during live events through illicit and unmonitored donations, thus evading tax scrutiny.

Just as Excelsior published yesterday in these pages with the case of YouTube and its Super Chats and Super Stickers, which are used to illicitly transfer money between illicitly obtained funds and payments to content creators without any oversight by authorities, two more platforms are joining this model of money laundering and illegal donations: Spotify and Twitch.

Over the past six years, various authorities around the world have echoed these illegalities, but in countries like Mexico, no attention has been paid, even though the United States Department of the Treasury has raised concerns and, with the permission of various companies, has shut down distribution channels for music, videos, and digital purchases of Mexican singers linked to organized crime.

According to documents obtained by Excélsior, on August 6 of this year, it was reported that the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury sanctioned three high-ranking members and a prominent associate of the Mexico-based Cartel del Noreste (CDN), formerly known as Los Zetas. The aforementioned associate is Ricardo Hernández Medrano, known by his stage names El Makabelico or Comando Exclusivo, a well-known narco-rapper. “His concerts and events are used to launder money on behalf of the organization, and 50% of his royalties from streaming platforms go directly to the group.” The platforms used by this singer, now closed by the companies, are YouTube and Spotify, where he had more than three million followers.

The investigation conducted by the US authorities indicates that the CDN relies on these alternative sources of income and money laundering methods to fuel his criminal enterprise, diversifying his income beyond criminal activities such as drug trafficking, human trafficking, and extortion.

Some experts close to the Treasury Department affirm that, like Hernández’s case, dozens of Mexican streamers and singers with video and music channels on platforms such as YouTube, Twitch, and Spotify are being investigated in conjunction with the Financial Intelligence Unit, but so far no action has been taken due to loopholes in Mexican law.