Suspected darknet drug dealers stand accused of hiding a huge stash of Bitcoin that's now worth $16 million. They bought a fishing boat and a squid permit to conceal their crime, say US attorneys.
- A federal judge issued a warrant for seizure for about 392 Bitcoin, valued at about $16 million, which US attorneys said was owned by a group of Darknet drug dealers.
- US attorneys said the owners bought a 1974 Triumph fishing boat and a California squid permit to "conceal and disguise" drug money.
- The value of the Bitcoin is more than 10 times what it had been in January 2019, when it was found in during a search of a home in Ventura, California, according to the complaint.
A federal judge issued a warrant for seizure for about 392 Bitcoin, valued at about $16 million, which US attorneys said was owned by a group of Darknet drug dealers.
The Bitcoin, along with an old fishing boat and a squid-catching permit, have been held by US Marshals since 2019, according to a complaint for forfeiture filed in district court on December 29. Attorneys said a group of Darknet drug dealers held much of their money in Bitcoin, and laundered $600,000 by buying a California squid permit and a 1974 Triumph fishing vessel.
The 391.5873617 Bitcoin was worth about $16 million on Sunday morning, more than 10 times times what it was when it was discovered during a raid in the Ventura, California, in 2019. The owners, who attorneys said were arrested, were not identified.
In the forfeiture complaint, the bitcoin, permit, and boat are listed as "defendants."
"The defendants are in the custody of the United States Marshals Service in this District, where they shall remain subject to this Court's jurisdiction during the pendency of this action," said the filing.
Department of Justice attorneys who filed the complaint didn't respond to a request for additional information on the forfeiture request, raid, or defendants.
As Treasury officials move to put in place new regulations to attack money laundering via Bitcoin and other cryptocurrencies, the case is a reminder that some treat the currencies much the same as cash. Bitcoin can be stashed in a home, and $16 million in Bitcoin fits in a wallet.
Without further information, it's difficult to say exactly how the Bitcoin was stored, but it seems clear that it was in a wallet meant to keep it offline. Attorneys described it as a "cold storage" wallet. Early this month, Square CEO Jack Dorsey, a vocal Bitcoin owner and promoter, posted a guide to setting up a similar offline wallet.
—jack (@jack) January 3, 2021
Back when the Darknet Bitcoin was seized by federal agents, in January 2019, Bitcoin's price was hovering at about $3,400. By the time the US district court for the Central District of California issued its warrant on Monday, Bitcoin was above $30,000, though it briefly dipped below that mark. By Friday, Bitcoin had climbed over $41,000 for the first time.
The seized Bitcoin was earned through illegal drug sales on several Darknet marketplaces, according to the forfeiture complaint.
According to the US attorneys: "The defendant Bitcoin was derived from the sales of illegal drugs, including fentanyl patches and opioids dispensed without prescription, on the Darknet between 2016 and 2019."
They added: "The Vendor began selling illegal prescription drugs on the Darknet in approximately 2014 using multiple marketplaces, including Dream, Silk Road, AlphaBay, and Wall Street Market, and from 2014 and thereafter made approximately $250,000 worth of Bitcoin each month from the illegal drug sales."
Investigators made controlled purchases from the dealers between December 2017 and May 2018, before raiding the Ventura home on January 11, 2019, according to the complaint.
After the raid, authorities said they discovered that $600,000 in Bitcoin had been converted into cash, according to US attorneys.
To "conceal and disguise" it, the dealers used the money to buy a 1974 Triumph fishing boat and a California squid permit, issued by the Department of Fish and Wildlife, both of which are now in federal hands.
The case, United States of America vs. 391.5873617 in Bitcoin, et al., was assigned last week to district judge Christina A. Snyder and magistrate judge Jacquieline Chooljian, according to a Monday filing. Snyder was nominated to the federal bench by then President Bill Clinton in 1997.
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