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$515 Million in Bitcoin Spent on Illicit Activity This Year

$515 million in Bitcoin has been spent on illegal activities in 2019, but this only accounts for 1% of total BTC transactions.

Recent research by Chainanalysis suggests that the amount of bitcoin (BTC) spent on illegal transactions this year could hit a record high of $1 billion, even as the ratio of illegal to legal transactions is shrinking, according to a report by Bloomberg on July 1.

As per the report, the total flat value of BTC spent on illegal activity so far this year is thought to be $515 million. The research suggests that by the end of the year, this figure will double to reach $1 billion.

However, the amount of BTC spent on illegal services as opposed to legal ones is on the decline. Chananalysis executive Hannah Curtis says that just 1% of BTC activity this year is illegal activity, which is down from 7% in 2012.

As per the report, the $515 million spent on illegal activities was used in transactions on the dark web: a small subsection of the deep web, which is in turn subsection of the internet that doesn’t appear in search engines (e.g. Google).

The largest illegal dark web marketplace for spending BTC is reportedly “Hydra.” BTC is apparently the cryptocurrency of choice on such marketplaces, and Monero (XRM) comes in second, according to the report. Oftentimes, these marketplaces are involved in the distribution of drugs and/or illegal pornography

As previously reported by Cointelegraph in April, for instance, two men behind the dark web marketplace NextDayGear pled guilty to selling steroids and controlled substances and to money laundering. The website apparently offered injectable and oral steroids, as well as Xanax, Valium and Viagra as a means to stymie unwanted side effects.

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German Police Seize Six Figures in Crypto From Suspects Involved in Dark Web Site

The Wall Street Market, the world’s second largest dark web market, was shut down with six figures in crypto seized by police.

German police, along with Europol, have shut down servers of a dark web marketplace and seized six figures in crypto from the arrested suspects, Europol announced on May 3.

The Wall Street Market, reportedly the world’s second-largest dark web market, has been shut down by the German Federal Criminal Police under the authority of the German Public Prosecutor’s office.

According to the report, German authorities arrested three suspects and seized over 550,000 euros ($615,000) in cash  along with bitcoin (BTC) and monero (XMR) in six figure amounts (actual value unspecified) as well as several cars, computers, hard drives and other items.

Europol noted that the Wall Street Market had more than 1.15 million registered users, with 5,400 of them registered as sellers of drugs, stolen data, fake documents and malicious software.

In the same announcement, Europol also officially announced that Finnish Customs also staged a takedown of dark web marketplace Valhalla, also known as Silkkitie. According to Helsinki Times, the authorities have also made a “significant bitcoin seizure,” from the website, which was operational in the anonymous Tor network since 2013.

In other crime news, two men recently plead guilty in the United States for illicitly selling steroids and controlled substances and laundering millions of dollars in cryptocurrencies and Western Union payments.

As well, in early April a court in Toronto ordered an online drug dealer to pay his entire $1.4 million bitcoin holdings to the state in what is reportedly Canada’s largest ever forfeiture.

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Bitcoin-Western Union Drug Sellers Nailed in NY, First BTC Money Laundering Case Recorded in Area

Another criminal use case of Bitcoin on the dark web is brought to light, this time in New York, Manhattan

Earlier this week, a District Attorney’s Office in Manhattan published a press release, detailing a case of Bitcoin money laundering by drug dealers that used both crypto and Western Union payments for selling illegal substances across the US and abroad.

Drugs, Viagra via Bitcoin and Western Union payments

The two accused, Crain and Sanchez confessed in court that they had been operating a drug business by accepting payments in Bitcoin and through the global platform Western Union.

The defendants had been running their shop for around 5 years, since 2013 up to 2018, and during that period they had sold 10,000 packages of steroids and other illegal substances that cause a harmful addiction. Over that time, they managed to make nearly $3 mln.

The abovementioned press release says that the accused used several crypto wallets, so as to make fund tracing difficult. They then sold BTC on a crypto exchange to convert it into fiat and then put the regular currency on their bank accounts.

As for the Western Union payments, they were made under fake identities
from senders.

The dark web store ‘NextDayGear’

Sanchez and Crain also were offering drugs by using a few sites they ran on the dark web. People bought their ‘goods’ in China and throughout the US, from nearly every state.

Their dark web stores ran under the name ‘NextDayGear and sold steroids
along with sedatives to reduce the effect from steroids and Viagra.

As per the press release, among the customers of the shop were sportsmen
of various scales, police force members, the military, as well as other drug
dealers, lawyers, doctors and a school teacher.

As for the means, how these BTC payments were traced, the District Attorney stated that his office has wide resources and skilled professionals for that. The press release also states:

“This was the first conviction for money laundering involving cryptocurrency by New York State prosecutors.”

Criminals use crypto equally to traditional payments

This criminal case is yet another evidence that criminals do not prefer Bitcoin
and crypto over traditional legal payment systems and cash.

Last year, several reports came out, confirming that, including the one by Europol:

“The use of cash by criminals remains one of the most significant barriers to successful investigations and prosecution. It is a threat that has not received sufficient international attention or legislative solutions.”

Another evidence was publicly presented by director of analysis for the Foundation for Defense of Democracies, Yaya J. Fanusie, to the US Congress last year.

The post Bitcoin-Western Union Drug Sellers Nailed in NY, First BTC Money Laundering Case Recorded in Area appeared first on Ethereum World News.

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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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Dark Web Drug Dealers Arrested for Laundering $2.3 Mln In BTC

In the US, three drug dealers were arrested after laundering over $2 mln in Bitcoin on the dark web

The three criminals arrested in the US on Tuesday were charged with running stores on the dark web. Codd, Maccarty and Anderson had been selling counterfeit Xanax tablets and other drugs to people in over 40 states.

Great amount of drugs confiscated

During the arrest, the law enforcement agencies found the greatest shipment of pills that had ever been seized in New Jersey, says the press release. Those included around half a million alprazolam pills, fentanyl-laced heroin, methamphetamine and other substances that cause addiction and a serious damage to health.

Apart from that, the police seized equipment for making drugs and crypto worth thousands of US dollars.

The arrest and charges

All the three were arrested and given charges of 4th and 5th degree of conspiracy. Money laundering was another charge, as well as selling drugs and identity theft.

The investigators that conducted the arrest had been watching several ATMs in New York and New Jersey. Later on, they used the help of their Cyber Lab to trace where the money goes. Afterwards, the suspects were found.

The court documentation says that it was Anderson who ran two stores on the dark web selling the drugs. The other two criminals assisted him in producing drugs and buying the necessary gear for that.

To conduct the arrest, agents, working
undercover, had to purchase several thousand alprazolam pills, as well as GHB
and ketamine from the dark web stores operated by the arrestees.

Here come Bitcoins

All the three arrested received payments for the drugs in Bitcoin – over $2.3 mln overall. They put the crypto on pre-paid cards and managed to withdraw over $1 mln from ATMs located in New Jersey and Manhattan.

Bitcoin has been frequently used in the criminal world lately. Several big cases were reported in South Africa, where ransom for kidnapping was demanded in BTC. However, several recent studies suggest that criminals still prefer to use cash rather than Bitcoin.

The post Dark Web Drug Dealers Arrested for Laundering $2.3 Mln In BTC appeared first on Ethereum World News.

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FBI Has 130 Ongoing Crypto Cases, a ‘Small Sliver’ of All Investigations, Agent Says

FBI agent Kyle Armstrong said the Bureau has 130 ongoing crypto-related cases, with dark web drug sales a particular concern, Bloomberg reported Wednesday, June 27.

Speaking at the Crypto Evolved conference in New York on Wednesday, the supervisory special agent said the number represented “a small sliver,” of the FBI’s activities, which number “thousands of cases.” The agency has nonetheless noticed an increase in illegal activity facilitated by cryptocurrency payments, he said.

The 130 “threat tagged” files related to crypto span a gamut of crimes, including human trafficking, kidnapping, ransomware attacks and illicit drug sales.

This latter has become a focus for the Bureau, according to Armstrong, highlighting the opioid epidemic in the U.S. He considered the dark web to be a factor in enabling drug abuse, saying that 10 percent of global drug users make their purchases on illegal online marketplaces.

Armstrong’s figure of 10 percent is notably not higher than statistics released by an older Global Drug Survey from 2017, which found the global median for the percentage of drug users who use the darknet to be 10.1 percent. 90 percent then, continue to purchase illicit substances via more ‘traditional’ methods.

Armstrong, who manages the three-year-old Virtual Currency Initiative for the FBI as it relates to money laundering activities, said that while the underlying blockchain technology makes it easier for investigators to trace cryptocurrencies than cash, the relative anonymity of transactions can prove an obstacle.

In February, a two-year study of the dark web ecosystem claimed that Bitcoin may in fact be losing its cachet as the most popular currency on dark web markets, seemingly due to consumers’ annoyance at network traffic and high transaction fees.

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US Prosecutors Seize $17 Mln in BTC, Seek 4,000 BTC More for Dark Web Dealings

U.S. law enforcement has seized $17 mln in Bitcoin (BTC) and other cryptocurrencies, and is seeking to seize about $24 mln more, from two Maryland, USA men, on charges of selling counterfeit drugs on the dark web, according to a Department of Justice (DoJ) press release published yesterday, June 26.

In addition to around $17 million in Bitcoin and other cryptocurrencies, Law enforcement has seized $2.5 million in computer equipment, and over $1.5 million in cash. The government is further seeking to forfeit “no less than” $5.67 million, plus the value of 4,000 BTC (about $24 mln at press time), believed to be the proceeds of the illegal drug sales.

The six-count indictment –– unsealed June 22 –– alleges that from Nov. 2013 through June 2017, Ryan Farace, 34, sold fake “Xanax” pills on the dark web in exchange for Bitcoin. Together with Robert Swain, also 34, he is further charged with laundering the proceeds through means “designed to conceal the source and ownership of the illegal funds.”

Farace now faces a maximum sentence of five years in prison on drug distribution counts, with both men facing a maximum of 20 years’ imprisonment on money laundering charges. 

In February, a two-year study of the dark web ecosystem claimed that Bitcoin may be losing its cachet as the number one currency on darknet markets, seemingly due to users’ frustrations with network traffic and transaction fees.

In March, Cointelegraph reported on a case in Ohio, in which federal prosecutors sought the forfeiture of over 500 Bitcoin (then worth about about $5.5 mln, now worth about $3 mln) seized during the investigation of a group allegedly producing fake identity documents. The US Marshals Service has periodically held auctions for seized crypto assets, selling 3,813 bitcoins (about $22.8 mln today) in January of this year.

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World Famous Brothel Buying Into Bitcoin?

The Bunny Ranch, which is well known for even those who do not frequent such places thanks to being featured on HBO’s Cathouse show, is mulling over the advantages that could come with offering a Bitcoin payment option.

Bitcoin made its name on the dark web because of the anonymity, and other reasons, it brought to the user, helping them buy anything from drugs and weapons, as well as sex and porn, discreetly.

Things could be going full circle now as the upmarket brothel sees an advantage in harnessing that same privacy in payment.

Exploring the recesses of Bitcoin

Owner Dennis Hof, who has seven such legal establishments across Nevada, says he is exploring Bitcoin as a payment option due to demands being made by their high-end clients.

“We have some of the richest men in the world coming in and out of my brothels. Our high dollar clientele is accustomed to getting anything they want here, so when I started hearing requests from them to look into accepting Bitcoin, I took those suggestions very seriously.”

Bitcoin has created a new breed of the wealthy elite, but it has also become a plaything of those already well endowed in the bank account. Thus, it is not surprising that clientele of the Bunny Ranch have their fingers in the cryptocurrency pie.

The adoption of such cryptocurrencies has spread far and wide, but it is more than just a payment system for such clients, it is a secretive one.

“Friends of mine like Heidi (Fleiss, Hollywood’s most notorious madam) have been trusted with a lot of powerful secrets, and the anonymous nature of Bitcoin is a natural fit for people who have much to lose if their private matters were to ever fall into the wrong hands,” Hof added.

It would also, according to Hof, cut down on the duffel bags of money that are brought to his door, posing a security risk.

Full circle of adoption?

Bitcoin had a lot of things going for it when it was the tool of the dark web for payments. The anonymity, the global transfers, the speed and cheapness of it all – back then.

It was used to buy all sorts of things from the shady underbelly of the Internet, but now, as it has stepped into the light, its image has changed. More a tool of the Wall Street investor than the illicit arms dealer, Bitcoin has evolved.

However, the aspects that made it a success in a secretive world still remain. And, it is because of this, that it looks like it is doing somewhat of a full circle, again being thought of as a tool for paying for sex.

Of course, this is a new era and a much less seedy situation, but the way in which Bitcoin moves, it is showing its versatility to corner and re-corner, all parts of the market.