The DOJ Ran a Bitcoin Laundering Sting and Caught Dozens of Drug Dealers

By Aaron Mak

The Department of Justice announced Tuesday that it had arrested more than 35 people and seized more than $23.6 million in assets in the “first nationwide undercover action to target vendors of illicit goods on the Darknet.” Over the course of a year, Homeland Security Investigations (HSI) agents posed as money launderers who were helping narcotics and weapons dealers convert cryptocurrency into U.S. dollars. A cache of around 2,000 Bitcoins, which are worth more than $20 million, make up the bulk of the seized assets. Agents also seized Bitcoin mining equipment, 333 bottles of liquid synthetic opioids, and a grenade launcher.

“At this crucial time of unprecedented drug related deaths, one of the greatest threats we face is cyber drug trafficking,” a Drug Enforcement Administration official said in a statement. “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.”

Bitcoin is often the currency of choice on the darknet, also known as the dark web, because it allows buyers and dealers of illicit goods to more easily retain their anonymity. Authorities claim that they identified dealers in popular marketplaces like Silk Road, AlphaBay, and Hansa. HSI Agent Angel Melendez told the Verge the agency is starting to focus more on individual sellers rather than marketplaces, because the illegal activity simply moves elsewhere when a hub is shut down.

In the past, authorities have also posed as weapons dealers, harvested IP addresses, and hacked suspects’ computers to track down alleged criminals on the dark web. Bitcoin exchanges themselves have also been pressured by law enforcement to keep better tabs on their customers to ensure that their platforms aren’t hosting money laundering and other crimes.