PULLING THE THREAD: Investigators Unravel Dark Web Drug Ring Through ATM Withdrawals

They say to catch criminals, you gotta follow the money. Not so easy today with bitcoin cryptocurrency and the dark web. The dark web’s private browsers house encrypted online content which does not appear in traditional internet searching. It can be the perfect host to conceal crime, especially when goods are paid for in bitcoin.

This is what three men from New Jersey thought as they used the dark web
to sell drugs and launder money. Their virtual storefront, Sinmed, advertised drugs such as heroin-laced fentanyl, ketamine, GHB and methamphetamine to buyers in 43 states as well as D.C. and Puerto Rico. To avoid suspicion from the postal service, the men rotated through addresses of legitimate businesses including law firms, real estate brokers, and New York talent agencies. To avoid detection, the men slept in hotels, used GPS jammers in their cars, and operated a shell company to purchase the chemical components for their pills.

Their crime went undetected for years. Over the course of their operation, they shipped more than 1,000 packages to buyers and laundered at least $2.3 million in cryptocurrency. But they couldn’t clear one final hurdle: they couldn’t easily ‘cash out’ to make larger purchases in the traditional economy, like buying expensive cars or real estate while keeping their identities secret. 

Money Talks
In 2017, the men withdrew large amounts of cash from ATMs around
Manhattan, including special teller machines which convert bitcoin to cash. The over one million dollars they withdrew did not go unnoticed. After receiving a tip, the Manhattan District Attorney’s office triggered an investigation into the three men from New Jersey. The Secret Service, the Department of Homeland Security and local police in collaboration with the U.S. Postal Service posed as interested buyers and executed a sting operation. They purchased more than 10,000 tablets from the suspects. And then they waited.

It wasn’t long before police connected the dots. The indictment details
several ATM transactions wherein the men exchanged cryptocurrency for real money.  They did this by loading it onto generic, prepaid debit cards which they converted into cash by withdrawing $700 increments over the course of about two years.

bitcoin atm machine used to withdraw dark web money from drug trafficking

When the men were finally arrested, authorities found two industrial power mixers, pill presses, punch dies to imprint pills, a ‘cookbook’ of drug recipes and five over sized buckets filled to the brim. It was estimated they were in possession of at least 420,000 pills at the time of seizure, a reported street value of approximately $3 million. The prosecutors in court proceedings against the three defendants noted that the dark web made it difficult to trace exactly how much money the drug dealers took in or the identity of most of the buyers, but by following the cash withdrawals, they were finally able to track down the source.  At a press conference, Manhattan DA Cyrus Vance said, “Pulling the thread and following the money in 2019 today is about knowing where to look on the internet and in cyberspace.”

What is Bitcoin?
Many dark web purchases are paid for in crypto-currency like Bitcoin, for the purpose of making purchases harder to detect and revenue more fluid. Bitcoin payments are processed through a private network of computers linked together through software which allow the users to authorize purchases through a shared program. Bitcoins may be purchased with standard (traditional) currencies and placed into an online bitcoin wallet which is accessed through a smartphone or computer program.
The dark web allows the transfer of illegal goods, such as child
pornography
or illicit drugs, while shielded with privacy and protected from traditional legal regulations. Also, it offers a solution to connect buyers and sellers from anywhere in the world. In recent years, the drug trafficking trade has exploded due to anonymity on the dark
web.
 

Need to speak to a criminal defense lawyer?  W. Joseph Edwards is an experienced criminal defense attorney in Columbus, Ohio with over 30 years of criminal defense work.  Speak directly to Joe at 614-309-0243.

References:

Winston, A. (2019, April 16). How a Dark Web Drug Ring Was Uncovered After Suspicious A.T.M. Withdrawals. Retrieved from
https://www.nytimes.com/2019/04/16/nyregion/dark-web-drug-dealing.html

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