This morning, one of Sweden’s largest newspapers, Svenska Dagbladet (SvD), published an extensive investigation into how criminal networks have been using Spotify to launder money for years. Specifically, they paid for fake music streams released by artists with ties to the groups and then cashed in on the manipulated popularity.
Analysts at the Swedish Police National Task Force have been watching (or listening) to rappers releasing their music on the streaming giant since autumn 2021. First, to extract clues and information about crimes from the lyrics of the songs.
Then, as the streaming patterns began to emerge, analysts began to suspect that criminals were using the service for an entirely different purpose.
Well, from a series of interviews Conducted with people who either belong to these networks or have insight into the work against streaming bots, the SvD reporters found that criminals have indeed been using Spotify for money laundering since 2019.
One of the respondents, who is part of a criminal network, said the first step is to buy bitcoin through “cash-in-hand” transactions initiated through a Facebook group. The gangs then used the cryptocurrency to pay for fake streams — that is, music playback through bots, hijacked accounts, or other bogus methods. Apparently, this contact was made via Telegram, earning the sellers the nickname “Telegrambots”.
Symbiotic relationship between gangs and artists
How does this plan actually launder money? With more streams, the ratings on the lists increase. With higher ratings comes more real streams, and artists associated with the gangs have set up their own record companies to capitalize on the rigged popularity. Real streams mean real payouts from Spotify, and voila, the money is back, cleaned of the illegal activities it came from.
In turn, many of the rappers gain “legitimacy” from their affiliation with the gangs. It is reported to have tens of millions of streams on the platform.
Due to Spotify’s payout structure (free or premium accounts, what country the listener is in, etc.), there’s bound to be some money lost along the way. There is also a risk of discovery. Spotify cracks down on bot-streaming and can stop payments to accounts proven to be involved in the illegal activity.
According to the newspaper’s sources, this means that this type of money laundering is only worthwhile when the amounts involved are over a few million Swedish kronor (1 million SEK = approx. 84,000 euros).
Earlier this year, Spotify, the crown jewel of the Swedish startup ecosystem, announced that it had paid out $40 billion to the music industry since it began operations.
TNW has reached out to Spotify for comment on the revelations, but has not received a response as of publication. We’ll update this article if one comes out. However, SvD says it has been trying to reach the streaming giant for an interview for weeks but has only received an email reply saying Spotify has no evidence its service is being used for money laundering .