https://www.thelocal.se/20230906/how-swedish-criminal-gangs-allegedly-launder-money-through-spotify
Spotify used to launder drug money?
On a series of articles gang members, criminals and investigators from the police tell how Spotify is used to launder drug money.
"I can say with 100 percent certainty that this goes on. I have been involved in it myself," SvD quoted one anonymous gang member as saying.
He said his gang began using the music streaming giant Spotify for money laundering in 2019, around the time Swedish gangster rap became popular in the country and started winning music awards.
"We have paid people who have done this for us systematically," he said.
Describing the process, he said the gangs would convert their dirty cash to bitcoin, then used the cryptocurrency to pay people who sold fake streams on Spotify, which is a Swedish company.
Spotify is feigning ignorance. They somehow missed that this has been going on for at least four years.
Do other entertainment services have the same problems in the modern digital world?
(Score: 2) by Fnord666 on Monday September 11 2023, @05:56PM (3 children)
(Score: 5, Interesting) by Freeman on Monday September 11 2023, @06:27PM (1 child)
How could you even tell? I guess you could assume that, if it's not being used, it must be for nefarious reasons? But, at the same time, who's going to be checking that X random customer is using them in this way? Does Spotify regularly check-up on all of the streams that are paid for? I mean, they could just not accept bitcoin, presto, no problemo? Unless there's a lot of people using bitcoin with Spotify? In which case, maybe there's something to this whole, money-laundering scheme?
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 3, Informative) by RS3 on Monday September 11 2023, @07:09PM
I have no idea what goes on generally, nor about Spotify, just speculating: quality control, if done at all, is often a random sampling thing. They may occasionally check on specific accounts. They more likely have some kind of algorithm that attempts to identify (and persecute) accounts that appear to have "suspicious activity", and that may be enough for them- all they rely on.
As far as I can tell, more and more online things are depending on algorithms / bots to do _everything_, including canceling and blocking people, and heaven help you to find human help, and even if you do, they're just parrots. Ask for supervisor / someone authoritative and you get put on hold, told they're "in a meeting", on and on, until the call gets mysteriously cut off.
(Score: 0) by Anonymous Coward on Monday September 11 2023, @06:58PM
"at scale"
Nice!
(Score: 5, Funny) by DadaDoofy on Monday September 11 2023, @06:40PM (2 children)
I'm reasonably sure you don't get paid unless something is actually streamed. TFA keeps us completely in the dark as to what is meant by a "fake" stream. If it is nothing but silence, then no that's not fake, and it's already been legitimately streamed on Spotify by a legitimate band.
https://www.theguardian.com/music/2014/jul/25/vulpeck-the-band-who-made-20000-from-their-silent-spotify-album [theguardian.com]
(Score: 5, Informative) by looorg on Monday September 11 2023, @06:56PM (1 child)
As far as I can understand it, based on this article and a few others, they do actually have songs. So they are not fake or silent. They have made a real song, usually apparently of the gangster rap variety. What they do is to convert drug money to bitcoin. They use the bitcoin to pay someone to listen or play the song non-stop on a streaming farm or how ever many times they pay for. So they are not actual listeners here but someone with thousands of machines that are just playing the songs around the clock, probably other songs to since it would probably be a tad suspicious if it was just one song on repeat 24-7 and then times a few thousand machines. If they can't spot that in their listener-base they are not looking. The song will then climb the various Spotify charts and drag in normal listeners to. Eventually Spotify will payout money to who owns the song as clean cash per however many times it has been played.
So they are buying sort of fake listeners to manipulate the algorithms and position in the charts to convert the drug money to clean money. Not sure how much the transaction costs
What is missing from the equation is how much does it cost to buy a million streams or plays from someone. Or however many plays they need to manipulate the system in a meaningful way. After all if a million streams is just say $5000 it's not exactly great. On the other hand if it's low key and basically risk free then I guess it's great in that regard. But it all really comes down to how much it costs to get $5k out. Quick math down it should be like $5 for 1000 listening/plays. So however much it costs to buy that matters.
That Spotify says it's not happening is natural. It wouldn't be great for their image or service if it happened large scale. Sort of like how X, Facemeta etc don't want to be known for having large amounts of fake users they make payouts to either. That said I would doubt it's only criminals that does this. If record companies can create "fake hits" this would probably be the way to do it to.
(Score: 5, Interesting) by DadaDoofy on Monday September 11 2023, @08:10PM
Great, thanks for the clarification. This bot farm technique is commonly used to push music further up the charts. Or sometimes down the charts as happened to some recent political anthems that rose to the top but were quickly pushed out when they went viral. I suspect it is mostly paid for with legit earnings from record companies and political advocacy organizations, but I'm sure a fair share of ill-gotten gains are laundered this way as well, through bitcoin or good old fashioned cash.
(Score: 0) by Anonymous Coward on Monday September 11 2023, @06:59PM (1 child)
Launder all the money, see if I care. Money laundering makes the world go 'round.
(Score: 2) by hendrikboom on Monday September 11 2023, @11:13PM
Especially launder Canadian money in times of Covid. it's plastic, and will survive soap and water without shredding.
(Score: 3, Interesting) by Immerman on Monday September 11 2023, @11:32PM (5 children)
Heck, I doubt it's limited to entertainment.
Maybe I'm just the suspicious sort, but whenever I see something listed on Amazon listed for like 73x the price of the exact same product from other sellers (always something weird, so it's obviously not just a misplaced decimal point), I tend to assume that's what's going on.
(Score: 2, Touché) by Anonymous Coward on Monday September 11 2023, @11:58PM
The restaurant around the corner that is empty at lunchtime but doesn't go out of business.
(Score: 3, Interesting) by anubi on Tuesday September 12 2023, @04:10AM (3 children)
I've seen exactly that on our of print books on Amazon.
Like early TCP/IP books, books I've seen, aren't worth anything, selling for hundreds of dollars. Just because no one else is offering a competing copy.
I also saw an old book of thermodynamic tables of the properties of Propane listed for an outrageous price. Gosh, these days, it's all an equation! Anyone with a copy of GWBasic and a DOS PC could reproduce the whole book in short order.
Collectors items and charities seem to be the way to launder money. I'll donate to your nonprofit, while you donate to mine.
Of course, the ownership paths are obfuscated.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 3, Informative) by Immerman on Tuesday September 12 2023, @01:09PM (1 child)
Just a bit of correction - thermodynamic tables are NOT "all equations".
We continue to use tables because our equations are a gross oversimplification of reality, good for no more than a rough estimate, while engineering often depends on the kind of accurate information that can only be acquired from real-world measurements.
An example: we have no equations that predict the way liquid water becomes denser than ice below ~4C. We could probably, in theory, predict it using quantum mechanics - but the predicting bulk or chemical properties using QM is so difficult that it's not worth attempting (last I heard we could accurately predict the chemical properties of pure hydrogen-1 - anything more complicated is beyond what our most powerful supercomputers can handle)
(Score: 2, Informative) by anubi on Tuesday September 12 2023, @10:42PM
Maybe I should have said "curve-fit equations to empirical data".
The thermodynamic tables of various hydrocarbon fluids ( stuff from the 50's ) that I did get varied as to who did the research. I have some from ARCO oil research, and some that came out of Russia. They are close, but measurement error creeps in.
I figure the table interpolation error was about the same as the curve fitting error to the equations, as they did use the original empirical data to evaluate the equation form and coefficients.
I grew up with steam tables, so that's what I went after. This was 40 years ago. DOS was making it's first appearances.
At the time, I was designing some solar powered cooling systems that were to run from thermal energy, with electrical power used only for control , circulation pumps, and fans. They were basically thermal transformers where a large thermal flow at low temperature differential ( solar collector to evap cooler ) powered a small thermal flow across a high thermal differential ( evap cooler to house / cold storage ).
Turned out the design for the old Arkla-Servel Electrolux ammonia-based kerosene burner powered refrigerators commonly found in rural farmhouses of the 1940's was a far more practical design. I just did a Rube Goldberg on it.
At least I had some fun chasing that old wild goose, but my efforts didn't amount to anything.
"Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
(Score: 2) by Freeman on Tuesday September 12 2023, @01:39PM
When you're spending other people's money, $100 for an out of print book that you're supposed to acquire, isn't that much.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by ledow on Tuesday September 12 2023, @07:46AM
Every service in the world has a similar problem. You think you can't do this on eBay, Facebook Marketplace, selling plastic figures, over-priced eBooks on Amazon, or anything else?
Spotify aren't "laundering" them money themselves, the headline implies the correct interpretation - it's being USED to, and so many services can be used to. You could walk into a foreign money exchange and use it to launder money, depending on what checks they do.
The only detection or prevention of laundering is a set of end-to-end processes that identify the users and the suppliers, and a rigorous banking protocol that attaches a real, identified person to all transactions.
It's why Bitcoin will never be an "official" currency, because it's designed in a way that facilitates money-laundering by preventing identification of the source of funds. No auditor is going to sign off on that without being able to identify the person sending or receiving money because they'd be turned over in a matter of months doing something like that.
Even charities nowadays are having to demand to know the source of the money being given to them, they can't just accept significant-sum donations without identifying who gave them to the charity (the old "anonymous donation" thing doesn't work when recorded on your books). There are UK and EU regulations now that have tightened that all up. Russian gangsters were paying even private school fees in dirty cash (and it was always "my uncle in Russia" paying, not the parent who lived in the country or was guardian of the child), and technically most private schools are non-profits or charities. They now need to identify the person paying the fees, or donating, for their records even if they don't reveal it publicly.
Pretty much any business or organisation in the world can be used for money-laundering, all they need to be able to do is provide any valuable good or service (or favour, even) in exchange for money, in effect. Which is pretty much the definition of a business.
The way to stop it is not to try to shame Spotify (who are taking genuine money from people, who then listen to music, and then paying the artist a smaller piece of money for that music). It's to cut that "paying people in Bitcoin to listen to Spotify streams" part. That's the part where government and banking regulators are supposed to have in-hand through checking of income, transactions and outgoing and red-flagging anything suspicious. Because Bitcoin, eventually, has to be converted to something real in order for people to actually benefit from it, and doing that almost always makes it appear on some record somewhere.
Hell, most UK banks won't let you send or receive money to any Bitcoin market that isn't regulated. The transaction literally gets blocked. You can buy crypto on Paypal (a regulated bank in the UK) because they have to identify the user and you can't just accept crypto from anywhere, it has to be from another registered Paypal user.
The problem here is not Spotify. It's being able to pay people in Bitcoin for doing ANYTHING AT ALL, with no record of where that money come from or went to. And that's exactly the part that the governments are cracking down on. Even a "legitimate" job that pays in Bitcoin is incredibly suspicious and flags up all kinds of problems - work from home and paid in Bitcoin? Then the HMRC, IRS or whatever local equivalent will be paying you some very special attention when you try to convert that into goods or services or pay your bills with it. Because even a legitimate employer could try to do that to, say, pay under the minimum wage, avoid paying tax, slip around actually having you on their records, pay people who are banned from being company directors (e.g. bankrupts), etc. or even just make it so the end-user doesn't have declared income so they can avoid paying child maintenance or continue claiming benefits when they are actually working, and so on.
The problem here is - again - Bitcoin. When you create a service, no matter how well-intentioned - that facilitates money-laundering, money-launderers will use that platform to their advantage almost immediately. It's like creating an anonymous, untraceable, secure image storage platform and then being surprised when it's used for the worst kind of imagery.