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A government official confirmed that personalities involved in the massive flood control scandal are using cryptocurrencies to hide illicit funds. This effectively created new challenges for the team trying to recover the funds.
Undersecretary Renato Paraiso, chairperson of the Independent Commission for Infrastructure’s Technical Working Group (ICI-TWG), disclosed on Tuesday that they are witnessing a “new phenomenon” where suspects are laundering money through digital assets.
Challenges in Recovery
Speaking to ABS-CBN News, Paraiso highlighted the difficulty of tracking these assets due to the lack of local regulation over the cryptocurrency market.
Unlike traditional bank accounts, unless conducted on a centralized cryptocurrency exchange, crypto transactions do not typically require physical identification documents.* This allows funds to be moved rapidly outside the country to “financial havens”.
*Note that some exchanges still do not require identification, although prominent exchanges will almost always have KYC (Know Your Customer) systems in place.
Paraiso: Cooperation Helped Recover USDT From a Personality—‘I Think the Discayas’
Paraiso warned that without jurisdiction over foreign exchanges, the government is limited if those platforms refuse to heed requests.
“The basis na naka-recover tayo ng USDTs, according to AMLC (Anti-Money Laundering Council), is just by mere cooperation, dahil nakipagcooperate sa atin yung (crypto) exchange ng USDT na nakita natin from one of the personalities I think the Discayas, so na-recover natin yun. PEro yung ibang exchanges, kung hindi sila tumugon sa pakiusap natin ay wala tayong magagawa because we don’t exericise jurisdiction over them.”
Translation: “The reason we were able to recover the USDTs, according to the AMLC (Anti-Money Laundering Council), was purely because of cooperation. The (crypto) exchange holding the USDT linked to one of the personalities — I think the Discayas — cooperated with us, so we were able to recover those funds. But with the other exchanges, if they do not respond to our request, there is nothing we can do because we do not exercise jurisdiction over them.”
Sarah and Curlee Discaya are a married couple whose network of construction firms secured more than ₱30 billion worth of government flood-control contracts in recent years. Their rapid rise from little-known contractors to major public-works players has made them central figures in ongoing investigations into alleged irregularities in infrastructure spending.
Cooperation Proves Effective
While Paraiso cited jurisdictional challenges, recent precedents show that major industry players are cooperating with Philippine authorities.
In the high-profile case of Anson Que, the Philippine National Police (PNP) Anti-Cybercrime Group successfully collaborated with blockchain analytics firm Chainalysis and stablecoin issuer Tether to track and freeze illicit USDT.
Similarly, global exchange Binance assisted Philippine law enforcement in the above case.
Total Assets Frozen
Paraiso revealed that approximately ₱12 billion worth of total assets, which are primarily bank accounts and properties, have already been frozen in relation to the flood control investigation.
“We’re going after these people. These people have to be made accountable.”
Renato Paraiso, Chairperson, the Independent Commission for Infrastructure’s Technical Working Group (ICI-TWG)
Legislative Solution: The Cadena Act
As the executive branch chases the stolen funds, the legislative branch is proposing technology to prevent such corruption in the future.
Senator Bam Aquino has filed Senate Bill 1330, known as the Cadena Act (previously Blockchain the Budget bill), which mandates the use of blockchain technology for the national budget.
The bill aims to put government appropriations and procurement on a public, immutable ledger.
Proponents argue that had the Cadena Act been in place, the transparency inherent in blockchain would have made it significantly harder to divert flood control funds without immediate detection, preventing the need for complex asset recovery operations later.
This article is published on BitPinas: Flood Control Scam Funds Being Laundered Through Crypto, Gov’t Official Confirms
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