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World Cup games in Mexico at risk after crypto-laundering drug lord killed

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World Cup games in Mexico at risk after crypto-laundering drug lord killed

FIFA World Cup organizers are reportedly considering moving this year’s tournament out of Mexico after the death of a crypto-laundering Mexican cartel kingpin led to a wave of violence from his supporters. 

Nemesio Oseguera Cervantes, otherwise known as “El Mencho,” ran the Jalisco New Generation Cartel (CJNG) and was killed on Sunday during clashes between his organization and Mexican authorities. 

The 59-year-old was reportedly injured during a firefight in the town of Tapalpa, and died while being transported to Mexico City. 

His death resulted in an outpouring of violence from supporters. This included the burning of vehicles and buildings across the country, including in Guadalajara, a scheduled host of this summer’s World Cup.

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As a result, rumours began to circulate that the city could be pulled from the tournament’s list of venues. Indeed, the host of Ticket Talk, Scott Friedman, claims a contact within FIFA informed him that games will be moved out of Mexico if the situation doesn’t improve in the next week or two. 

Bitcoin investor and private fund founder Mike Alfred also claimed that “credible chatter” informed him that the cartel violence has led FIFA to consider moving games slated to take place in Mexico to the US and Canada.

Read more: Up to 127 years for CEO who laundered Mexican cartel funds with bitcoin

The violence has led to countries issuing warnings against travelling to affected regions of Mexico, and the US warning its citizens in the Jalisco region to seek shelter and stay inside.

FIFA is yet to publicly comment on the situation in Mexico. Protos has reached out to FIFA for comment and will update this piece should we hear back.

El Mencho laundered drug funds with crypto brokers

Cervantes founded the CJNG after working his way up the cartel ranks, killing rivals along the way. It was a notoriously violent, heavily armed organization that has been responsible for numerous massacres. 

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The drug lord was designated as a Kingpin in 2015 and his drug trafficking enterprise was recognised as one of the most powerful criminal groups in Mexico.

The US reward for information leading to his arrest was set at $15 million.

Read more: UK ‘El Chapo’ faces 120 years in US prison over bitcoin-for-drugs ring

Studies led by TRM Labs found that the CJNG has been utilizing crypto to convert drug funds into stablecoins. It was then sent to various wallets, withdrawn from exchanges, or spent as crypto. 

In 2022, the Drug Enforcement Administration reportedly discovered that the CJNG had used Binance to move up to $40 million worth of cryptocurrency made through its cocaine and methamphetamine sales. 

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A Mexican broker was sentenced to eight years in prison for organizing a series of crypto laundering hubs across the US that took cash from the CJNG’s drug sales and converted it into crypto. 

TRM Labs has also documented how Chinese money laundering brokers help out these cartels, as well as Chinese suppliers that sell them drug-related chemicals in exchange for crypto. 

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Crypto World

South Korea Tightens Crypto Rules with 5-minute Asset Verification Mandate

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South Korea Tightens Crypto Rules with 5-minute Asset Verification Mandate

South Korea has ordered all crypto exchanges to reconcile their internal ledgers with actual asset holdings every five minutes after an inspection uncovered weaknesses in internal controls.

The directive was announced on Monday by the Financial Services Commission (FSC) after a meeting with top crypto exchanges and the Digital Asset Exchange Alliance (DAXA), during which they discussed the findings of an emergency inspection triggered by the Bithumb payout incident.

The inspection found that three of the country’s five major exchanges were reconciling balances only once every 24 hours, limiting their ability to respond quickly to discrepancies. Systems designed to halt trading during major mismatches were also found to be insufficient, raising concerns about how exchanges would handle large-scale errors.

In February, Bithumb mistakenly distributed 620,000 Bitcoin (BTC) to 249 users during a promotional event. The exchange later announced that it recovered 99.7% of the funds the same day. The remaining 0.3%, 1,788 BTC that had already been sold, was covered using company reserves.

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Related: Bithumb seeks to reappoint CEO despite recent controversies: Report

South Korea mandates five-minute asset checks

Under the new measures, exchanges must implement automated ledger-to-wallet reconciliation systems operating on a five-minute cycle. They will also be required to introduce defined criteria for triggering automatic transaction halts in the event of significant discrepancies.

Beyond reconciliation, regulators are pushing for sweeping changes to internal operations. High-risk processes like promotional payouts will require stronger oversight, including third-party cross-checks and multi-level approval systems. Exchanges will also need to separate high-risk accounts and implement automated verification tools for payments.

Top Korean crypto exchanges. Source: CoinGecko

Furthermore, external audits will shift from quarterly to monthly, while disclosures will expand to include detailed asset balances by wallet and ledger.

“The financial authorities and the DAXA plan to complete the rule changes needed to implement the improvement measures within April this year,” the FSC wrote.

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Related: South Korean brokerage Korea Investment & Securities eyes Coinone stake: Report

Bithumb delays IPO to post-2028

Last week, Bithumb announced it is now targeting an IPO after 2028, marking another delay from its earlier 2025 plans as it works through restructuring and regulatory pressure. The exchange said it will focus on strengthening accounting policies and internal controls through 2027, following an advisory agreement with Samjong KPMG.

Meanwhile, Naver Financial has also delayed its planned share swap with Dunamu by about three months, now targeting a shareholder vote on Aug. 18 and completion by Sept. 30.

Magazine: South Korea gets rich from crypto… North Korea gets weapons

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