- Drug trafficking actors use both CEXs and DNMs for sales.
- The US government held approximately 200,000 BTC in seized cryptocurrency, now worth $6.69 billion.
US federal agents have seized crypto assets worth $54 million from a drug ring based in New Jersey, the US Attorney’s Office said on November 2.
The group of convicted drug dealers possessed wallets containing laundered crypto assets, officials said. These proceeds came from their drug activities between 2010 and 2015.
The convicts used a number of cryptocurrencies such as Bitcoin [BTC]Ethereum [ETH]and Ethereum Classic [ETC] to transfer the proceeds.
The group’s ring leader made arrangements with his buddies over the phone to launder 30,000 ETH outside the US. The Bahamas was a suggested destination.
The value of the seized 30,000 ETH was approximately $54 million.
FBI-Newark Special Agent in Charge James Dennehy said:
“Our $54 million forfeiture should serve as a lesson to those who wrongly believe we cannot trace their illegal conduct or ill-gotten proceeds.”
Crypto use in illegal drug trafficking
Blockchain analytics company TRM Labs published a June 2023 report detailing the use of cryptocurrencies among illicit actors, including drug traffickers.
According to the report, crypto-mediated illegal drug trafficking mainly takes place on darknet markets (DNMs).
Source: TRM Labs
In 2022, DNMs saw transactions worth a whopping $1.49 billion. More than 80% of this was spent on Russian-speaking DNMs. Most of the illegal trade in DNMs involves the sale of drugs.
In July 2023, another leading analytics company launched Elliptic marked the use of centralized exchanges (CEXs) for the sale of illegal drugs. It found crypto assets worth $32 million, mainly in BTC and Tether [USDT]– this year in the CEX portfolios of drug dealers.
Source: Elliptical
By 2023, there was a 450% year-on-year growth in the number of individual payments.
What does the US government do with seized crypto?
It is well known that the US Marshals Service auctions have seized crypto assets for fiat currency. The money is usually transferred to the victims or forfeited to the public treasury. So far the US government has sold Bitcoin worth $366 million.
However, the US government has been painfully slow to convert Bitcoin into dollars. The Wall Street Journal reported last month that the government held about 200,000 BTC, citing an analysis by crypto firm 21.co.
Although it estimated the value of these BTC coins at $5.3 billion on October 15, after the bull run the value now stood at $6.69 billion.
