Suspected darknet drug traffickers are accused of hiding a huge stash of Bitcoin that is now worth $ 16 million. They bought a fishing boat and a squid license to cover up their crime, US lawyers say.


Treasury officials are putting in place new regulations to combat money laundering via Bitcoin. R.Tsubin / Getty Images

  • A federal judge issued a seizure warrant for around 392 Bitcoins, valued at around $ 16 million, which U.S. lawyers say belonged to a Darknet drug smuggling group.

  • US attorneys said the owners purchased a 1974 Triumph fishing boat and a California squid license to “cover up and disguise” the drug money.

  • Bitcoin’s value is more than 10 times what it was in January 2019, when it was found during a search of a house in Ventura, Calif., According to the complaint.

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A federal judge issued a seizure warrant for around 392 Bitcoins, valued at around $ 16 million, which U.S. lawyers say belonged to a Darknet drug smuggling group.

The Bitcoin, along with an old fishing boat and a squid catching license, has been held by the US Marshals since 2019, according to a forfeiture complaint filed in district court on December 29. Lawyers said a group of Darknet drug dealers held much of their money in Bitcoin and laundered $ 600,000 by purchasing a California squid license and a 1974 Triumph fishing boat.

Bitcoin 391.5873617 was worth around $ 16 million on Sunday morning, more than 10 times what it was when it was discovered in a raid in Ventura, Calif., In 2019. The owners, who lawyers say have been arrested, have not been identified.

In the forfeiture complaint, the bitcoin, the license, and the boat are listed as “defendants.”

“The defendants are in the custody of the United States Marshals Service in this district, where they will remain subject to the jurisdiction of this Court for the duration of this action,” the file said.

Justice ministry attorneys who filed the complaint did not respond to a request for further information about the confiscation request, the raid or the defendants.

As Treasury officials prepare to put in place new regulations to attack money laundering via Bitcoin and other cryptocurrencies, the case recalls that some treat currencies in much the same way as cash. Bitcoin can be hidden in a house, and $ 16 million worth of Bitcoin fits in a wallet.

Read more: ‘This is madness’: Andreessen Horowitz and Fred Wilson slam Trump administration, claiming it is trying to ‘put in place’ new ‘flawed’ crypto rules by 11th hour

Without more information, it’s difficult to say exactly how Bitcoin was stored, but it seems clear that it was in a wallet meant to keep it offline. The lawyers described it as a “cold storage” wallet. Earlier this month, Square CEO Jack Dorsey, a Bitcoin owner and developer, published a guide to setting up a similar offline wallet.

Back when the Bitcoin Darknet was seized by federal agents in January 2019, the price of Bitcoin was soaring at about $ 3,400. By the time the U.S. District Court for the Central District of California issued its warrant on Monday, Bitcoin was above $ 30,000, although it briefly descended below that mark. On Friday, Bitcoin had climbed to over $ 41,000 for the first time.

The seized Bitcoin was earned through illegal drug sales in several Darknet markets, according to the confiscation complaint.

According to US attorneys: “The defendant Bitcoin was derived from the sale of illegal drugs, including fentanyl patches and over-the-counter opioids, on the Darknet between 2016 and 2019”.

They added, “The seller started selling illegal prescription drugs on the Darknet around 2014 using multiple marketplaces including Dream, Silk Road, AlphaBay, and Wall Street Market, and from 2014 and onwards, he generated around $ 250,000 worth of Bitcoin each month from the drug sale. “

Investigators made controlled purchases from dealers between December 2017 and May 2018, before raiding Ventura’s home on January 11, 2019, according to the complaint.

After the raid, authorities said they discovered that $ 600,000 in Bitcoin had been converted to cash, according to U.S. lawyers.

To “hide and disguise” it, the dealers used the money to purchase a 1974 Triumph fishing boat and a California squid license, issued by the Department of Fish and Wildlife, both now in the hands of the federal government.

The United States of America vs. 391.5873617 case in Bitcoin, et al. Was attributed last week to District Judge Christina A. Snyder and Examining Magistrate Jacquieline Chooljian, according to a file released Monday. Snyder was appointed to the federal bench by President Bill Clinton in 1997.

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