Drug Dealers Targeted in Sweep of Illicit Online Marketplaces
Posted June 26, 2018 11:45 p.m. EDT
Updated June 26, 2018 11:46 p.m. EDT
WASHINGTON — More than 35 people were charged with selling drugs on the so-called dark web, the Justice Department announced Tuesday, marking the first time that federal prosecutors made the sellers of illegal goods their primary focus rather than the operators of illicit online marketplaces.
Investigators seized opioids, cocaine and other drugs, more than 100 guns and assault rifles, a grenade launcher and five cars in a broad federal inquiry in which prosecutors opened more than 90 cases. They also took nearly $24 million in cash, gold, and bitcoin and other cryptocurrencies.
“Criminals who think that they are safe on the darknet are wrong,” the deputy attorney general, Rod J. Rosenstein, said in a statement, using another term for the dark web, where people can use encryption and electronic currencies to hide their identities. “We can expose their networks.”
Homeland Security investigators posed as a money launderer who exchanged virtual currencies on the dark web, the authorities said.
“Special agents were able to walk amongst those in the cyberunderworld to find those vendors who sell highly addictive drugs for a profit,” said Derek Benner, acting executive associate director of Immigration and Customs Enforcement’s Homeland Security Investigations. “HSI has infiltrated the darknet.”
The suspects were mostly in their 20s and 30s. Scattered across the country in states like New York, Maryland, Ohio, California and Vermont, they sold a variety of drugs including opioids, cocaine, methamphetamine and marijuana, prosecutors said.
In most cases they accepted bitcoins as payment, then attempted to launder that money through undercover agents who exchanged the coins for cash. The agents then had mailing addresses for the vendors, and were able to obtain data about who had owned the coins.
Bitcoin has long been the currency of choice for those looking to purchase illegal goods online. Its appeal is obvious: The currency is controlled by no bank or government, and it can be difficult to conclusively link a bitcoin to a person.
But every bitcoin transaction is recorded on what is known as a ledger called the blockchain. If you know what to look for, the transactions are essentially public. Cybersecurity experts have predicted that bitcoin’s structure would eventually allow law enforcement to use it to make arrests.
The government could also compel companies who trade in bitcoin to hand over information about those using the cryptocurrency, cybersecurity experts have said.
Online drug trafficking, which has long provided easy access to illegal commerce, has emerged as one of the most pernicious issues that drug enforcement officials face, James J. Hunt, the Drug Enforcement Administration special agent in charge, said in a statement.
Drugs, weapons, child pornography, stolen financial data and other illicit materials have been bought and sold on black market websites like the Silk Road and AlphaBay, online bazaars that have been targeted by law enforcement authorities.
Some of those marketplaces have become hubs for sales of fentanyl, a deadly synthetic opioid that has become a driver of the nation’s opioid addiction crisis.
But the government has generally targeted the founders of those websites, rather than the vendors selling goods on their platforms.
The government shut down the Silk Road and prosecuted its founder, Ross W. Ulbricht. Ulbricht is now serving a life sentence for overseeing a global, online drug-trafficking business. Some vendors on Silk Road were also prosecuted.
Last July, the Justice Department seized AlphaBay, then the world’s largest criminal online marketplace. Authorities arrested Alexandre Cazes, the creator and administrator of the site, on charges of racketeering, drug trafficking and fraud. Cazes killed himself while in custody in Thailand, the Justice Department said.
Newer forms of cryptocurrencies are designed to evade detection, Greg Nevano, an ICE official who investigates them, said during a hearing this month before a House Financial Services subcommittee.
“Some newer cryptocurrencies have features that make the tracing of them quite complicated,” he said. “These new anonymity-enhanced cryptocurrencies are clearly ripe for illicit use in an effort to subvert legitimate law enforcement inquiries.”
While these cryptocurrencies are more difficult to trace, “it is not impossible,” Nevano added. He said law enforcement agencies could press companies to hand over customer data or devices.