- Drug trafficking actors are using both CEXs and DNMs for sales.
- The US government held around 200,000 BTC in seized crypto, worth $6.69 billion now.
US federal officers seized crypto assets worth $54 million from a drug ring based in New Jersey, the US Attorney’s Office said on 2 November.
The group of convicted drug dealers owned wallets holding laundered crypto assets, the officials said. These proceeds came from their drug operations between 2010-2015.
The convicts used a number of cryptocurrencies such as Bitcoin [BTC], Ethereum [ETH], and Ethereum Classic [ETC] to transfer the proceeds.
The ring leader of the group was making arrangements with his mates over telephone calls to launder 30,000 ETH outside of the US. The Bahamas was one suggested destination.
The value of the seized 30,000 ETH stood at approximately $54 million.
FBI–Newark Special Agent in Charge James Dennehy said,
“Our forfeiture action of $54 million should serve as a lesson to those who mistakenly believe we can’t trace their illicit behavior or their ill-gotten proceeds.”
Crypto usage in illicit drug trafficking
Blockchain analytics firm TRM Labs published a report in June 2023, detailing crypto usage among illicit actors including drug traffickers.
According to the report, crypto-mediated illicit drugs trade mostly takes place on darknet markets (DNMs).
Source: TRM Labs
In 2022, DNMs saw transactions worth as much as $1.49 billion. Over 80% of this was spent on Russian-language DNMs. Most of the illicit trading on DNMs involves drug sales.
In July 2023, another leading analytics firm Elliptic highlighted the usage of centralized exchanges (CEXs) for illicit drug sales. It found crypto assets worth $32 million—predominantly in BTC and Tether [USDT]—in the CEX wallets of drug dealers this year.
Source: Elliptic
There was a 450% year-on-year growth in the number of individual payments in 2023.
So, what does the US government do with seized crypto?
It is commonly understood that the U.S. Marshals Service auctions seized crypto assets for fiat currency. The funds are typically transferred to victims or forfeited to government treasuries. So far, the US government has sold Bitcoin worth $366 million.
However, the US government has been painfully slow to convert its Bitcoin into dollars. The Wall Street Journal reported last month that the government held around 200,000 BTC, citing an analysis by the crypto firm 21.co.
Though it estimated the value of these BTC coins to be $5.3 billion on 15 October, its value now stood at $6.69 billion after the bull run.
Source: https://ambcrypto.com/us-doj-seizes-54-mln-in-crypto-from-drug-dealers-more-here/