At WebX 2026 we helped initiated a conversation with our partners titled “Preventing Crypto Misuse: Asset Tracing and Confiscation Frameworks,” bringing together law enforcement, academia, and industry to talk through a problem that rarely gets a room this qualified: what happens after the crime, when the money needs to actually be traced, frozen, and returned.
Moderated by Hiroshi Ozaki (Executive Advisor, KPMG Japan), the panel included Dr. Sungyong Kang (INTERPOL Financial Crime and Anti-Corruption Centre), Shigeru Yotoriyama (retired Senior Commissioner, National Police Agency of Japan), Professor Junghee Lee (Korea University), and June Lau (APAC Head of Policy and Regulatory Affairs, Elliptic).
Stablecoins are the infrastructure of choice for laundering, not just for legitimate finance
Lau put a number on it: an FATF report from March 2026 found that roughly 84% of illicit volume moving through digital assets used stablecoins, out of a market that now exceeds $300 billion across 250-plus stablecoins in circulation. Her explanation was direct: stablecoins hold their peg, settle near-instantly on weekends and across borders, and move value hop to hop across chains for close to nothing but gas fees. Crypto didn’t invent financial crime, she argued. It gave it industrial-scale, near-zero-marginal-cost infrastructure.
Jurisdiction is still the bottleneck, not detection
Dr. Kang made the case that tracing illicit funds on-chain is often the easy part. The hard part is that unregistered or improperly registered virtual asset service providers make it nearly impossible to know which country to even ask for help, and once a jurisdiction is identified, mutual legal assistance requests can take long enough for the funds to move again. INTERPOL’s workaround has been building voluntary cooperation directly with exchanges willing to freeze suspicious accounts, rather than relying solely on court orders that foreign providers routinely reject.
Yotoriyama added the domestic picture: Japan has seen real cross-border enforcement wins, including cases where NPA intelligence led to arrests in India and Nigeria over crypto-based scams targeting Japanese victims. But he was candid that Japan lacks a functioning civil forfeiture system, meaning the criminal standard of proof (guilt beyond reasonable doubt) limits how much illicit crypto can actually be seized, even when it’s been traced.
Emerging typologies regulators haven’t caught up to
Lau flagged prediction markets as the next gap: on-chain activity showing dirty bitcoin converted to stablecoins, run through binary contracts on prediction platforms, and coming out the other side looking like clean gambling winnings. Her recommendation to regulators was specific: classify what prediction markets legally are, mandate screening of their wallet addresses, coordinate through bodies like FATF and IOSCO on shared typologies, and use regulatory sandboxes to make the risk visible before the volume gets too large to manage.
The closing consensus
Each panelist left the room with one line. Yotoriyama called for Japan to pursue direct cooperation with overseas exchanges and introduce civil forfeiture. Professor Lee’s was “security by design,” building protection into systems from the start rather than patching smart contracts that can’t be modified after deployment. Lau’s was to stop treating the transaction as the unit of analysis and instead follow the wallet across its full on-chain history. Dr. Kang closed on communication: better laws mean little without close coordination between regulators and the law enforcement agencies actually trying to use them.
Grateful to our partners and all four panelists for a conversation that stayed technical, specific, and useful for 40 minutes straight, exactly what this topic deserves.