Now that fugitive Wikileaks founder Julian Assange is in custody, investigators finally get a chance to ask him where the group’s money went.
Rumor always had it that donations in conventional currency were routed through German banks before vanishing into the crypto underworld.
If anyone knows the details, it’s the man facing extradition to Virginia for helping people hack military computers a decade ago.
He might be willing to talk. He might even weaponize a few details that reflect badly on the institutions that handled the accounts.
After all, he has very little to lose at this point for dumping the dirt at a moment when his onetime partners need all the PR they can get.
All roads lead through Frankfurt
Wikileaks funding channels have resisted official scrutiny since the organization enraged the Pentagon back in 2010 over the Iran War data leak.
Although friction never reached the point of a formal banking ban, several global transaction networks like PayPal and Visa shut Assange’s group out of their platforms.
As a result, conventional funding and donation channels closed. And with crypto networks in their relative infancy, someone had to exchange physical currency on the way into Bitcoin and other untraceable ledgers.
Since a German nonprofit collected the donations, most of the limited attention given this topic focused on the German banks.
It hasn’t been a great decade for the two biggest of those institutions, Deutsche Bank and Commerzbank. Both have coincidentally settled charges that they turned a blind eye to laundered money.
Of course the highest-profile funds moving through their accounts came from Russia, but Assange may well have connections in that part of the world too.
Embarrassing the Pentagon a decade ago definitely made him popular in the Kremlin. And whatever his role was with Hillary’s emails, a lot of people see links back to Moscow there as well.
If anyone knows all the arrangements, it’s Assange. Now that he’s facing at least a five-year jail term if and when the British send him to the United States, he has a mild motive to cut a deal.
Deal maker, deal breaker
Such a confession would come at an extremely inconvenient time if it fingers either of the big German money laundries.
Neither has the capital to remain a viable global entity on its own. A foreign competitor like JPMorgan could literally buy both with cash on hand.
Only two things keep that kind of hostile cross-border bid in check. First, German pride in what was once one of the most prestigious banking systems in history is a stubborn thing.
Second, confidence in both institutions’ balance sheets is low. A foreign buyer just doesn’t know how heavily the assets on the books need to be discounted or how deep any regulatory taint goes.
In theory Commerzbank alone is carrying $18 billion in net assets that the market now considers worthless. The real number could be a lot higher if sketchy compliance wasn’t limited to the Know Your Customer desk.
We only need to look closer to home at Wells Fargo for evidence that the numbers shareholders see don’t always reflect reality.
Deutsche Bank’s books have become a black hole, sucking in around $35 billion in additional capital simply to keep the operation afloat. The management theory here is old and obvious: if they can’t thrive on their own, maybe they’ll do better welded together.
If nothing else, they’ll have efficiencies of scale to work with. Unfortunately, it takes money to lay off redundant workers and combine two sets of operations into one entity. It’s especially expensive in Europe.
Merger negotiations currently have the German government’s blessing because it keeps both banks in the country and relieves stress on Commerzbank in particular, which is still 15% government-owned after the 2008 crash.
But it only takes a little stink around one side of the marriage or the other to make shareholders start demanding another option.
Julian Assange can kill this deal if he wants to. It all depends on how much he wants to embarrass the German government and interfere with its efforts to protect two symbols of national pride.
I’m thinking he would normally be reluctant to share his banking partners with the regulators, but this is a special case.
It’s not so much softening the legal trouble he’s already in. Unless there are other shoes to drop, cooperating on all fronts might buy him back a few years of freedom at best.
That’s not really worth the seven years he’s already spent trapped in the Ecuadorian embassy cut off from most of the things that make modern life bearable.
His future either way is nebulous. There’s talk he might join other whistleblower types in Moscow, go back to Sweden or simply stay in London.
But to the extent that he’s motivated by resentment and an urge to upset other people’s best laid plans, he might simply reveal his banking secrets without a formal quid pro quo.
Assange has no loyalty to his banks. They’re part of the system he likes to disrupt.
And if it weakens one of the strongest financial situations in Europe, he might even find one more act of disclosure fun.
We didn’t see any unflattering documents from German banks dumped on Wikileaks over the weekend.
Maybe he’s waiting to see just how much trouble he’s in. It’s unlikely that he doesn’t have any secrets left to reveal.