Illicit Liquidity as Battlespace: Rethinking Finance in Asymmetric Conflict

Adam Rousselle 

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Illicit liquidity has emerged as the hidden scaffolding of modern conflict – a decentralized architecture enabling covert influence, conflict financing, and strategic evasion on a global scale. This report examines the continued operation of Huione, a Chinese-language criminal marketplace that facilitates large-scale financial laundering across Southeast Asia, despite public claims of shutdown. It further explores digital laundering tools more broadly, building toward a working typology. Leveraging encrypted messaging apps and informal financial networks, Huione enables the movement of billions of dollars in illicit funds through fiat-to-stablecoin conversions, card transfers, and in-person cash exchanges–critical infrastructure for state-aligned criminal actors, proxy networks, and scam-industrial complexes.

While often treated as a cybercrime or compliance issue, Huione and networks like it reflect a new reality: decentralized financial platforms now function as logistics and influence infrastructure in irregular conflict.This article argues that the U.S. and its allies should view this laundering ecosystem not just as a criminal threat, but as a strategic enabler of adversarial statecraft. Without a shift in how threat finance is integrated into operational planning, on-chain laundering infrastructure like Huione will continue to outpace enforcement, undermine deterrence, and fuel irregular conflict below the threshold of war.

Introduction

Starting in early 2024, blockchain analysts began tracing a set of suspicious transactions flowing out of Shwe Kokko–a lawless border town in Myanmar known for its Chinese-backed casinos and scam compounds. The money trail wound through obscure stablecoin swaps, informal brokers, and encrypted Telegram channels before disappearing into the digital void. According to open-source intelligence, the proceeds, originating from online fraud and forced labor, are ultimately linked to the financial wing of the Karen National Army (KNA), a militia currently engaged in armed resistance against Myanmar’s military regime.