Cryptocurrencies Worth $20M USD Seized In US Sting Operation

Crime, News | June 28, 2018 By:

A year-long sting operation in the United States has resulted in the seizure of assets worth $23.6 million and the arrest of more than 35 darknet vendors “who engaged in tens of thousands of sales of illicit good.”

The sting operation was conducted by the US Department of Justice (DOJ), US Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the US Secret Service (USSS), the US Postal Inspection Service (USPIS) and the US Drug Enforcement Administration (DEA). The operation used the first nationwide undercover action to target vendors of illicit goods on the darknet.

The Money Laundering and Asset Recovery Section (MLARS) of the DOJ’s Criminal Division coordinated the nationwide investigation of over 65 targets, that lead to the arrest and impending prosecution of more than 35 darknet vendors. The operation resulted in the seizure of more than $3.6 million in US currency and gold bars, as well as nearly 2,000 bitcoins and other cryptocurrencies, with an approximate value of more than $20 million. They also seized 15 pill presses, approximately 100 firearms, “massive amounts” of illegal narcotics, bitcoin mining devices and other computer equipment.

According to the statement, agents posed as money launderers on the darknet and exchanged US dollars for cryptocurrency. The agents were able to identify more than 50 darknet vendor accounts and attributed them to real individuals selling illicit good on darknet sites such as Silk Road, AlphaBay, Hansa, Dream, and others.

“Criminals who think that they are safe on the Darknet are wrong,” said Deputy Attorney General Rosenstein. “We can expose their networks, and we are determined to bring them to justice. This nationwide enforcement effort will reduce the supply of deadly drugs like fentanyl that are killing an unprecedented number of Americans.”

Amongst those charged federally, include two Maryland-based individuals – Ryan Farace and Robert Swain – that are accused of manufacturing and distributing alprazolam tablets, which are typically sold under the brand name “Xanax.” The suspects allegedly distributed the drugs through sales on the darknet in exchange for bitcoin, and then laundered the drug proceeds through financial transactions designed to conceal the source and ownership of the illegal funds. As part of the indictment, the government seeks the forfeiture of no less than $5,665,000, plus the value of 4,000 bitcoins believed to be the proceeds of the illegal drug sales, two residences, and two vehicles used to facilitate the drug distribution.

In another case, Nicholas J. Powell, 32, and Michael Gonzalez, 27, former and current residents of Parma, Ohio, were charged with conspiracy to distribute controlled substances and laundering money using the dark web. $437,000 in cryptocurrency -Bitcoin, Etherium, and Komodo – was seized from Powell.

“The Darknet is ever-changing and increasingly more intricate, making locating and targeting those selling illicit items on this platform more complicated,” said HSI Acting Executive Associate Director Benner. “But in this case, HSI special agents were able to walk amongst those in the cyber underworld to find those vendors who sell highly addictive drugs for a profit. The veil has been lifted. HSI has infiltrated the Darknet, and together with its law enforcement partners nationwide, it has proven, once again, that every criminal is within arm’s reach of the law.”

“At this crucial time of unprecedented drug related deaths, one of the greatest threats we face is cyber drug trafficking,” said DEA Special Agent in Charge Hunt. “Because the Darknet invites criminals into our homes, and provides unlimited access to illegal commerce, law enforcement is taking steps to identify and arrest those involved. I applaud all the agencies who participated in this groundbreaking investigation.”