How criminal networks in Sweden use false Spotify streams to launder money
This morning, one of Sweden’s largest newspapers, Svenska Dagbladet (SvD), published a thorough investigation into how criminal networks have used Spotify to launder money for years. Specifically, they have been paying for false streams of music published by artists with ties to the groups, and then capitalised on the engineered popularity.
Analysts at the National Operative Unit of the Swedish Police Force have been looking at (or listening to) rappers publishing their music on the streaming giant since autumn 2021. First, as a means of gathering clues and information about crimes from the lyrics.
Then, as streaming patterns began to crystallise, the analysts began to suspect that criminals were using the service for a different purpose entirely.
Now, from a series of interviews conducted with people belonging to either these networks or having insight into the work against streaming bots, SvD’s reporters have established that criminals have indeed been using Spotify to launder money since 2019.
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The first step, one of the interviewees belonging to a criminal network said, was to buy Bitcoin through “cash in hand” trades initiated via a Facebook group. The gangs then used the cryptocurrency to pay for fake streams — that is, plays of music by bots, hijacked accounts, or other inauthentic methods. Apparently, this contact happened through Telegram, earning the sellers the nickname “Telegrambots.”
Symbiotic relationship between gangs and artists
So how does this scheme actually launder money? With more streams come higher ratings on lists. With higher ratings come more actual streams, and artists connected to the gangs have set up their own record labels to be able to cash in on the engineered popularity. Actual streams mean real payouts from Spotify, et voilà, the cash is back, cleansed of the illegal activity from whence it came.
In return, many of the rappers gain “legitimacy” from their affiliation with the gangs. Reportedly, one has tens of millions of streams on the platform.
Some money will inevitably be lost along the way, due to Spotify’s payout structure (free vs premium accounts, which country the listener is in, etc.). There is also a risk of discovery. Spotify has been clamping down on bot streaming, and can stop payments to accounts that are proven to be involved in the illicit activity.
According to the newspaper’s sources, this means that this way of laundering money is only worth it when dealing with sums over a few million Swedish krona (1mn SEK = approx €84,000).
Earlier this year, Spotify, the crown jewel of the Swedish startup ecosystem, said that it had paid out $40bn (€37.2bn) to the music industry since the start of operations.
Update (12: 30 UTC, September 5, 2023): Spotify shared the following statement with TNW:
“Manipulated streams are an industry-wide challenge and Spotify has been working hard to address this issue. That said, Spotify is not aware of any contact by law enforcement concerning the suggestions in the SVD article, nor have our internal teams found anything or been provided with any data or hard evidence that indicates that the platform is being used at scale in the fashion described. ”
Spotify is not aware of any contact by law enforcement concerning the suggestions in the SVD article
The company adds that only 1% of streams on the service are deemed to be artificial, with systems detecting anomalies before they reach a “significant” threshold. Furthermore, the music streaming giant highlights its work with the Music Against Fraud Alliance, and educational resources provided to artists on the harms of stream manipulation.
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