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Alleged Silk Road Drug Dealer Arrested in the United States

Authorities have arrested alleged Silk Road drug trafficker Hugh Brian Haney per an announcement from a New York district attorney.

United States Attorney for the Southern District of New York Geoffrey S. Berman announced the arrest of alleged dark web drug dealer Hugh Brian Haney in a press release published on July 18.

Per the release, Haney has been charged with money laundering. He allegedly used cryptocurrency to launder more than $19 million of profits earned selling illegal drugs on the now-defunct darknet market Silk Road. Berman commented to the development:

“Today’s arrest should be a warning to dealers peddling their drugs on the dark web that they cannot remain anonymous forever, especially when attempting to legitimize their illicit proceeds.”

Angel M. Melendez, Homeland Security Investigations (HSI) special agent-in-charge, pointed out that — after Silk Road was closed in 2013 — cyber criminals simply sought other ways to “continue their criminal activities and more importantly launder their illicit digital currency.” Haney was allegedly one of those criminals. Melendez concluded:

“HSI special agents employed blockchain analytics to uncover and seize bitcoins valued at $19 million and usher Haney out of the dark web shadows to face justice in the Southern District of New York.”

The press release suggests that Haney operated on Silk Road under the pseudonym Pharmville. U.S. law enforcement reportedly made multiple controlled purchases of narcotics, including oxycontin, from Pharmville in 2011 and 2012. Those purchases resulted in a judicially authorized search of Haney’s house in Ohio in 2018.

The investigation allegedly exposed evidence that Haney was a high-ranking member or administrator of the Pharmville account. In 2017 and 2018, Haney reportedly transferred his Bitcoin (BTC) proceedings to a cryptocurrency exchange. In correspondence with the exchange, Haney claimed to have obtained his BTC through mining and from individuals he met online.

When Haney exchanged his cryptocurrency for fiat currency and moved it into an HSI bank account, the funds were seized pursuant to a judicially authorized seizure warrant from a custodial account at a bank in the Southern District of New York.

As Cointelegraph reported earlier this month, $515 million in Bitcoin had been spent on illegal activities in 2019 as of the beginning of July, but this only accounted for 1% of total BTC transactions up to that point.

In May, German police, along with Europol, shut down servers of a dark-web marketplace and seized six figures in crypto from the arrested suspects.

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US: Two Men Plead Guilty to Selling Drugs for Crypto and Laundering $2.8 Million

Two men plead guilty for illicitly selling steroids and controlled substances and laundering millions of dollars in crypto.

Manhattan District Attorney Cyrus R. Vance announced on April 23 that two men plead guilty for illicitly selling steroids and controlled substances and laundering millions of dollars in cryptocurrencies and Western Union payments.

Callaway Crain, 35, and Mark Sanchez, also 35, were allegedly behind the darknet website “NextDayGear,” and also manufactured some of the substances they sold. Among their products were reportedly injectable and oral steroids, as well as medication to counteract the adverse effects of their use, including Xanax, Valium and Viagra.

Per the announcement, the defendants shipped over 10,000 packages across the United States, generating over $2.3 million in revenue between 2013 and 2018. They purportedly used Western Union and cryptocurrency transactions, which were laundered and converted to cash.

The two men reportedly purchased steroids, precursor chemicals and other products from China and other countries, which they then marketed and sold, often under brand names they created. Among their customers were reportedly an NFL football player, a college football player, a professional volleyball player, fitness trainers, police officers and members of the armed services deployed overseas.

Crain and Sanchez pleaded guilty to money laundering and criminal sale of a controlled substance, with the promises of prison sentences ranging from two and a half to seven and a half years. They are expected to be sentenced on July 12 this year. Attorney Vance commented:

“Online drug sellers who do business in New York should take note: whether you’re operating in plain sight or in hidden corners of the dark web, my Office has the skills and resources to follow the money, shut down your business, and hold you accountable.”

The announcement claims that this was the first conviction for money laundering involving cryptocurrency that took place in New York. The announcement also points out that on April 16, New York state prosecutors also indicted three men for the sale of illicit drugs on the dark web and laundering $2.3 million in cryptocurrency.

As Cointelegraph reported in January, the value of bitcoin (BTC) sent to darknet markets increased by 70 percent during the last year.

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Ticketing’s Shady Underworld Getting Gutted

There has emerged a rather large problem when it comes to any big event – ticketing. It sounds simple enough to get ticketing right, but there are so many scammers and routers out there who are profiting off doing nothing.

There exists a dark underworld of secondary sellers who make up as big a portion of 30 percent of sales. These secondary sellers or scalpers, touts and black market dealers are defrauding, and raising the price for the event going public.

These exorbitant price hikes from secondary sellers, as well as fake tickets and scammers, are placing a black mark on the ticketing ecosystem, one that has a solution. Like many different markets in today’s world, Blockchain technology is starting to disrupt them, and it is now GUTS Tickets who believe they can streamline the process.

The dark ticket market

GUTS Tickets is looking to take the entire process of buying and receiving tickets and put it straight on the Blockchain. The power of the Blockchain is well known, yet its application continues to grow.

GUTS believes it can crush the underworld ticketing process by firstly cutting out the need for any such middleman who can raise the price of an event ticket as high as demand allows. They also believe that the immutable ledger of the Blockchain allows for no chance of defrauding or fake tickets being issued. GUTS tickets is already known in the Netherlands and sold out multiple shows with their Blockchain based application for the most famous comedian in Holland.

In 2009, Europe Economics undertook a study to gain a better understanding of the structure and scale of the secondary ticketing market. Their findings, as described further in GUTS’ Whitepaper, are briefly described here:

  • For popular music festivals, 20-30 percent of tickets are resold at a markup of 30 percent
  • For high-end events (e.g. Kings of Leon), 20-40 percent of tickets are resold at a markup of 100-250
  • For very high-end events (e.g. Madonna), 60-70 percent of tickets are resold, often with a markup exceeding 500 percent.

The GET-Protocol

Now, with this problem of secondary resellers sitting at the root of the problem, GUTS and their GET-Protocol, is primed to wipe this scourge from the ticketing ecosystem.

On the GET-Protocol, GUTS Tickets has allowed for Smart Contract tickets to be issued to wallet addresses.

These Smart Contracts allow for the creation and validation of events and tickets. The issuance and sale of tickets in primary and secondary ticket markets (which can be controlled by event organizers) and the distribution of ticket sale revenue and market/event fees between the stakeholders are both monitored and executed with these smart contracts.

With the live application of GUTS Tickets, end-users do not need any technical knowledge in order to use the platform. With this in mind, GUTS has facilitated several events with its application over the last year and has apparently already sold thousands of real-world tickets in the Netherlands.

They have made it even easier to see how this is all working with a visual showing of the sale of events tickets on the Blockchain. In this, users can see actual transaction occurring on the GUTS’ Blockchain.

Good for the artists and the buyers

Of course, the scourge of secondary sellers is a scourge to those who are desperate to buy tickets at any price, but it is also a problem for the artists.

GUTS has managed to attract the likes of superstar Martin Garrix’s manager and booker of Adele. These are people who know how important ticketing is and seem to be bracing a future disruptive technology that will affect more than just tickets but live music and events as well.

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