By CCN.com: The Manhattan District Attorney’s Office indicted three men for allegedly laundering $2.3 million in crypto by using debit cards pre-loaded with bitcoin and withdrawing large amounts of cash at ATMs in New York and New Jersey.
The trio was also charged with operating bogus storefronts on the dark web that sold illegal drugs, including counterfeit Xanax tablets, the DA’s Office announced in a statement.
Money-Laundering and Criminal Drug Sales
Chester Anderson, Jarrett Codd, and Ronald MacCarty were indicted with multiple felonies, including money-laundering, identity theft, and criminal sale of a controlled substance to buyers in 43 states.
Counterfeit Drugs and Crypto Seized At Drug Dens
Manhattan District Attorney Cyrus Vance said this crackdown was the largest pill seizure in New Jersey’s history.
In addition to seizing thousands of dollars in bitcoin at the defendants’ drug dens, authorities seized the following:
- 20,000 to 620,000 alprazolam tablets.
- 500 glassines of fentanyl-laced heroin.
- Gamma hydroxybutyric acid.
D.A. Warns Money Launders: ‘You Are On Notice’
Authorities said the counterfeit pills, which were stored in orange buckets, had a street value of $3 million. District Attorney Cyrus Vance warned money launderers and dark web operators that the law will hunt them down.
“If you are engaging in illicit activity on the dark web, you are on notice: We know how to find you. We know how to put you out of business. And we know how to hold you criminally accountable.”
One Defendant Operated A Bitcoin Machine
When mailing the counterfeit drugs to purchasers, the defendants used return addresses that falsely identified the sender as a New York City business, including multiple Manhattan law firms.
One of the defendants — Ronald MacCarty — operated a bitcoin machine at his sham drug shop in Asbury Park, New Jersey. The machine converted bitcoin-loaded prepaid Visa cards into dollars.
Another defendant — Chester Anderson — kept a small collection of cryptocurrency books at his New Jersey home, according to investigators.
The trio launched their dark web operation in 2016. Authorities began investigating them in 2017 at the behest of an anonymous tipster.
‘Operation Crypto Sweep’ Targets Con Artists
It’s likely that this New Jersey bust was related to Operation Crypto Sweep, a coordinated crackdown into cryptocurrency scams launched in 2018 by U.S. and Canadian regulators.
As CCN reported in May 2018, the North American Securities Administrators Association (NASAA) sent over 70 cease-and-desist letters to operators of sham crypto companies in more than 40 jurisdictions across the United States and Canada.
‘Operation Crypto Sweep’: US and Canada Investigate 70 Cryptocurrency, ICO Scams https://t.co/nXUo1xDHv5
— Real Time Crypto (@RealTimeCrypto) May 22, 2018
NASAA president Joseph Borg said one of the goals of Operation Crypto Sweep is to raise public awareness of the predatory scam artists preying in the unregulated cryptocurrency market.
“Crypto-criminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams,” Borg said.
Operation Crypto Sweep came shortly after a finding that fraud is alarmingly widespread among crypto investment promoters, according to a report by the Texas State Securities Board. Texas leads the United States in cryptocurrency crackdowns.
— iShook (@ishookinc) April 11, 2018
Goldman Sachs: We Never Planned to Launch Crypto Trading Desk
These and other bitcoin scandals could be part of the reason why investment bank Goldman Sachs backpedaled on opening a crypto trading desk.
Last week, CEO David Solomon insisted that Goldman Sachs never had any plans to launch a crypto trading desk, despite rumors to the contrary.
“We never had plans to open a cryptocurrency desk.”
Goldman Sachs CEO Kills the Rumor: 'We Never Had Plans to Open a Crypto Desk' https://t.co/8UIFEmDN9E
— CCN Markets (@CCNMarkets) April 12, 2019
Bitcoin is Criminals’ Favorite Cryptocurrency
By the way, bitcoin is the reigning champ among crypto criminals. According to blockchain analysis firm Chainalysis, bitcoin is used in 95% of cryptocurrency crimes.
Bitcoin is preferred over “privacy coins” such as Monero because it’s the most valuable and most-traded.
Bitcoin is Criminals’ ‘Favorite’, Claims Blockchain Forensic; Used in 95% of Crypto Crimes https://t.co/PLSi47eiR1
— CCN Markets (@CCNMarkets) April 25, 2019