Last week, I went to Kyrenia looking for cryptocurrency.
I found something considerably more interesting: a parallel financial system operating almost in plain sight.
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Kyrenia — Keryneia to Greek Cypriots, Girne in Turkish — is a beautiful Mediterranean town of hotels, restaurants, casinos and an old harbour that could easily persuade a visitor to forget the politics surrounding it. But history is impossible to separate from the place.
Turkey launched its military intervention in Cyprus on July 20, 1974, five days after a Greek-junta-backed coup overthrew President Archbishop Makarios. Turkey maintains that its intervention was necessary to protect the Turkish Cypriot community and argues that the Cyprus problem predates 1974. The Republic of Cyprus describes what followed as an invasion and continuing military occupation. Turkish forces captured Kyrenia during the opening phase of the conflict, and the island has effectively remained divided ever since.
In 1983, the Turkish Cypriot administration declared the “Turkish Republic of Northern Cyprus”. The United Nations Security Council declared the attempt to create the state legally invalid and called on countries not to recognise it. To this day, Turkey is the only country that recognises the TRNC as an independent state.
That international isolation has had consequences far beyond diplomacy.
I had travelled there because I had repeatedly heard about cryptocurrency moving through northern Cyprus. In particular, I wanted to understand the cash-to-crypto business: shops where physical dollars can apparently be converted into USDT, the dollar-linked stablecoin that has become enormously useful for moving value across borders.
I had also encountered information in my wider research suggesting cryptocurrency flows from the region were reaching wallets in Lebanon, including wallets of concern in investigations involving Hezbollah and Hamas-linked financial networks.
What I could investigate myself was much simpler.
Could somebody walk into these shops with a very large amount of physical cash and turn it into USDT?
So I went to find out.
Nothing prepared me for how easy it appeared to be.
Crypto shops seemed to be everywhere. You would pass one, turn a corner, walk or drive another two hundred metres and encounter another.
This was particularly strange because I wasn’t walking around some futuristic crypto economy. I wasn’t paying for my coffee in USDT. Restaurants weren’t quoting dinner in Tether. Taxi drivers weren’t asking me to scan a wallet.
Yet the infrastructure for converting cash into crypto was remarkably visible.
It raises an obvious question: who needs this many cash-to-crypto shops, and what are they being used for?
As Much As You Want
I asked our taxi driver to stop at the first shop.
I walked inside and played the part I have become rather good at over seven years of investigating the cash economy: the slightly confused blonde tourist who has money but doesn’t entirely understand what she is doing.
Could I bring cash and buy USDT?
Of course.
“What is the fee?”
“1.5 per cent.”
Plus $10 for the transfer.
Then came the important question.
“How much can I deposit?”
“As much as you want.”
I decided to test that statement.
“I have $250,000. Can I go back to my hotel and bring it?”
No problem, she told me.
Apparently they had cash-counting machines.
In fact, judging by what I could see, they had plenty of them.
Then I asked the question that should normally follow a stranger appearing with a quarter of a million dollars in physical currency:
“Do you need my passport? KYC?”
She looked confused.
“KFC?”
For a moment we had entered completely different regulatory universes.
She explained that there wasn’t a KFC nearby and that I would need a taxi to reach one.
At that point, KFC may genuinely have been easier to locate than KYC.
I wasn’t looking for fried chicken. I was asking about Know Your Customer – the basic process financial institutions use to establish who their customer is and, particularly with large transactions, understand the source and purpose of funds.
But the misunderstanding almost perfectly captured the absurdity of the situation.
I had just told a crypto dealer that I wanted to arrive with $250,000 in cash. She had told me that was fine. And we were now discussing where I could find a bucket of chicken.
I instinctively reached for my phone to film the shop and then noticed the cameras.
There were cameras everywhere.
And there was a man sitting inside watching me who looked considerably less amused by my questions than I was.
I decided my investigative journalism had achieved enough for one shop.
Back in the taxi, I asked my American friend — an experienced traveller — to photograph the storefront.
He had also noticed the cameras.
“No.”
So much for American courage.
I played the tourist and took a few photographs myself.
Then we drove off.
We barely had time to discuss what had happened before another crypto shop appeared.
The Second Shop
We stopped.
Same experiment.
“Can I deposit cash and buy USDT?”
No problem.
“How much?”
“As much as you want.”
“What do you need from me?”
Nothing.
Just the cash.
This time the commission was 1.5 per cent with no transfer fee.
I was delighted.
I had apparently negotiated a better money-laundering hypothetical simply by travelling 200 metres down the road.
Then I looked through towards an office.
Three men were standing around what appeared to be a large suitcase full of cash.
At this point the whole experience was becoming surreal.
The men were looking at me.
I was looking at the suitcase.
The suitcase, fortunately, had no opinion.
I left.
Another short drive and there was another shop, this one larger, with a conventional foreign-exchange business next door.
I changed $100 into Turkish lira and casually asked about crypto.
The man directed me next door.
This shop was busy.
So in walked the lost blonde tourist again, this time with a new story.
“I won money at the casino. How do I put it into USDT?”
“How much did you win?”
“$250,000.”
“Good for you.”
Again: no visible shock. No alarm. No frantic compliance officer emerging from behind a reinforced door.
“Where is the cash?”
“At my hotel.”
Fine. Go get it.
The fee was 2 per cent.
Now that offended me.
Forget the hypothetical compliance issue: two per cent was daylight robbery.
I told him another shop wanted less. We started haggling over a transaction that didn’t exist. Eventually he promised me a better deal.
I liked him immediately.
Around us sat Russian and Turkish men who looked as though central casting had been asked to populate a Mediterranean mafia movie.
This was not the friendliest environment for a woman wandering around asking questions about $250,000 in cash. But I have discovered something useful during years of doing this work: men in these environments frequently enjoy helping a woman who appears slightly lost.
How does this work?
Where do I send it?
What is USDT?
Can you help me?
How do I count the money?
The dumber I appear, the more educational the conversation sometimes becomes.
The cameras, however, were becoming difficult to ignore.
I abandoned the idea of filming and went back to the taxi.
My friend was still processing what we had seen.
He still wouldn’t take the photograph.
So I did.
Why Northern Cyprus Matters
My observations do not establish that every crypto shop in northern Cyprus is laundering money. But what I encountered deserves scrutiny and it fits into a much larger picture.
Northern Cyprus’s economic isolation has helped produce an unusual financial ecosystem. The Financial Times reported in 2025 that legislation could allow the number of casinos to rise from roughly 32 to as many as 64, amid warnings from critics that northern Cyprus risked sliding deeper into a “dark” economy and becoming increasingly vulnerable to money laundering.
That matters because casinos are inherently attractive environments for laundering physical cash. FATF has long identified the casino and gaming sector as vulnerable to criminal exploitation, particularly where AML controls and enforcement are weak.
I went in with a theory: if the casinos are the front door, the crypto shops might be the back door– the place where cash that never even touches a card table gets laundered into something portable, borderless, and increasingly hard for anyone to trace.
Nothing quite prepared me for how open it all was.
One recent analysis of Russian financial activity in Cyprus specifically highlighted the proliferation of cryptocurrency shops in northern Cyprus and argued that the territory’s limited oversight makes crypto attractive for moving Russian and Iranian-linked money and potentially circumventing sanctions.
Even anecdotal accounts from ordinary crypto users describe precisely the business model I encountered. In a 2025 discussion about cashing out crypto in Cyprus, one user described northern Cyprus as full of exchange shops where USDT could be exchanged for physical cash for roughly 1.5 per cent, allegedly without even providing a name. It is remarkably consistent with what I found on the ground.
The strange thing was the banks.
There seemed to be banks everywhere too.
Yet during my visit I saw remarkably little of what normally accompanies a thriving retail banking economy: customers queueing, people moving in and out, busy ATMs.
Plenty of banks, very few customers, hardly any cash machines in use. Whatever economy is actually running through Kyrenia, it doesn’t look like it’s moving through the front door of a bank. It looks like it’s moving through duffel bags, counting machines, and USDT wallets.
The crypto shops were another story. They had people. They had cash counters. They had cameras. And, apparently, they had an appetite for dollars.
From Suitcases to Blockchains
This is where northern Cyprus becomes relevant to Lebanon.
Lebanon has itself become increasingly cash-based since the collapse of its banking system in 2019. That has created precisely the kind of environment in which informal exchange networks, physical currency and cryptocurrency can overlap.
The U.S. Treasury has repeatedly warned about Hezbollah’s exploitation of Lebanon’s cash economy. In November 2025, OFAC sanctioned individuals it said had helped funnel tens of millions of dollars from Iran to Hezbollah through exchange houses. Treasury explicitly warned that Hezbollah was exploiting money-exchange companies and Lebanon’s cash economy to blend illicit finance with legitimate commerce.
In February 2026, Treasury again targeted what it described as mechanisms used by Hezbollah to generate and move funds, including Lebanon’s informal financial sector.
Hamas has likewise used cryptocurrency. U.S. Treasury sanctions have specifically targeted Hamas-linked virtual-currency exchanges and facilitators involved in cryptocurrency transfers, including transfers linked to the IRGC-Quds Force.
And Turkey itself already appears in documented regional terrorist-finance networks. In 2024, Treasury sanctioned entities in Lebanon and Türkiye for allegedly providing financial support to an IRGC-QF and Hezbollah network that generated hundreds of millions of dollars from Iranian commodity sales.
None of that proves that the Kyrenia shops I entered were part of those networks.
But it explains why these storefronts matter.
The vulnerability is extraordinarily simple.
Take physical cash whose origins may be difficult to establish. Convert it into USDT. Transfer that USDT to another wallet. That wallet can be controlled in Beirut, Istanbul, Moscow, Dubai or almost anywhere else.
The suitcase doesn’t have to cross the border.
The value does.
Crypto’s El Dorado
Northern Cyprus calls itself a state. Most of the world does not recognise it as one.
International isolation can create regulatory blind spots. Add casinos, physical cash, Russian money, sanctions pressure, exchange businesses and a rapidly expanding cryptocurrency economy, and those blind spots become internationally relevant.
I went to Kyrenia expecting to have to search for the underground crypto economy.
There was very little searching involved.
It was on the street.
One shop.
Then another.
Then another.
All I apparently needed was cash.
At one point I wondered whether I was exaggerating what I was seeing. Then another crypto sign would appear through the taxi window.
Northern Cyprus may have discovered the perfect financial product for an internationally isolated economy: the dollar without the American banking system.
USDT does not need a local correspondent bank to travel from one wallet to another. It doesn’t care whether a territory is diplomatically recognised. It doesn’t stop at the UN buffer zone. And once physical dollars can be converted into digital dollars with minimal scrutiny, geography becomes considerably less important.
For Lebanon, this deserves particular attention.
The question is not simply whether money is being physically transported from northern Cyprus into Lebanon, although cash movements deserve scrutiny of their own.
The bigger question is whether cash deposited in places such as Kyrenia can enter the blockchain there and reappear seconds later as USDT controlled by wallets in Lebanon — and, critically, who ultimately controls those wallets.
That is where blockchain analysis becomes indispensable.
Follow the wallets.
Identify their counterparties.
Map repeated cash-in and cash-out points.
Look for interaction with sanctioned addresses and known financial facilitators.
Because the next generation of illicit finance may not involve a suspicious wire transfer arriving at a Lebanese bank at all.
It may begin with a suitcase in Kyrenia.
And somewhere between the casino, the cash-counting machine and the blockchain, $250,000 can potentially cease being a pile of banknotes and become a string of characters on a phone.
No bank queue.
No correspondent account.
And, in my particular investigation, not even a serious conversation about KYC.
Although I did learn where to find the nearest KFC.