Tuesday saw the United States Department of Justice (DoJ) announce some damning results that arose from their “year-long, coordinated national operation” targeting illicit goods vendors transacting on the Darknet. Notably, one of the many listed outcomes was the seizure of almost “2,000 Bitcoins and other cryptocurrencies” – valued at over $20 million – and Bitcoin mining equipment, as well.
Let’s Be Clear
So as not to cause confusion, below are the direct, relevant Bitcoin (BTC) and crypto-related quotes from the DoJ’s press release.
The operation, which “culminated in four weeks of more than 100 enforcement actions around the country, resulted in the following:”
Seizure of nearly 2,000 Bitcoins and other cryptocurrencies, with an approximate value of more than $20 million; [and]”
Seizure of Bitcoin mining devices, computer equipment, and vacuum sealers.”
The DoJ’s report details seven instances whereby their coordinated operation led to federal charges. Of these, Bitcoin and/or cryptocurrency feature in six of these ~150-word case summaries.
The phrases “Bitcoin,” “crypto,” “Ethere[u]m,” and “Komodo” were used in 12, 5, 1, and 1 instance(s), respectively.
Also of relevance to the crypto industry, were the following comments made by an assistant director of the U.S. Secret Service (USSS), who, along with the U.S. Immigration and Customs Enforcement (ICE), the U.S. Postal Inspection Service (USPIS) and the U.S. Drug Enforcement Administration (DEA), worked with the DoJ on the year-long breakthrough investigation:
The Secret Service is proud to work with our law enforcement partners to help combat one of the largest threats to the U.S. financial infrastructure, money laundering with virtual currency.” – Kenneth Jenkins
Maryland Pair Make (Then Lose) $22M+ in Bitcoin, Crypto
Almost all of the Bitcoins and other cryptocurrencies that were seized as part of the nationwide investigation appear to be borne out of federal charges laid upon two Maryland residents, Ryan Farace and Robert Swain.
The indictment, made by the U.S. Attorney’s Office for the District of Maryland, alleges “that Farace distributed [alprazolam tablets] through sales on the dark web in exchange for Bitcoin, and that Farace and Swain laundered the drug proceeds through financial transactions designed to conceal the source and ownership of the illegal funds.”
The two men’s case summary continues, revealing that “to date, law enforcement has seized various crypto currency, to include bitcoin, valued at over $22 million at the time of the seizures, and over $1.5 million in cash.”
Tellingly, the DoJ details that “as part of the indictment, the government seeks the forfeiture of no less than $5.665 million, plus the value of 4,000 Bitcoin believed to be the proceeds of the illegal drug sales, two residences, and a vehicle used to facilitate the drug distribution.”
Sliding Doors Moment?
Somewhat poetically, news of today’s sizable crypto-confiscations come just one day after leading VC firm Andreessen Horowitz hired Katie Haun to co-lead their new crypto fund, ‘a16z crypto’.
Of course, Haun spent over a decade with the Department of Justice as a federal prosecutor. In this position, she led investigations into the Mt. Gox hack and the task force responsible for investigating one of the Darknet’s most notorious drug marketplaces, Silk Road.
With the crypto ecosystem now blessed with Haun’s invaluable expertise on matters relating to technological-regulatory overlap, is this a sign that the sector is maturing?
Indeed, many would agree that the public still – rightly or wrongly – associate the Bitcoin movement with underground culture, where its usage pertains exclusively to criminal activities. Today’s results from the DoJ certainly attest to this use case, given the operation saw over $20 million worth of Bitcoins seized; far more than their seizure of $3.6 million-plus worth of USD and gold bars.
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