[2019-08-24] BTC Transactions Lead to Int'l Drug Trafficking Ring’s Arrest

[nulltxmark]

Criminals often express their favoritism toward cryptocurrencies. The perceived privacy and anonymity associated with this payment method makes for an excellent tool. In the US, the Treasury is now targeting Chinese drug kingpins. More specifically, they are monitoring Bitcoin revenue streams. That form of payment has become all the more prominent as time went by.

CHINA, DRUGS, AND BITCOIN

The vast majority of drugs and other narcotics consumed in the United States is not home-grown. It is often imported from countries such as Colombia, Mexico, and in a fair few cases, even China. Particularly where opioids are concerned, Chinese drug dealers are playing an increasing role of importance. They are also involved in shipping fentanyl analogues and cannabinoids, among other substances.

Several arrests were made in August of 2018. At that time, the US Attorney’s Office highlighted an indictment in federal court in Ohio. Two Chinese individuals – who are father and son – were charged with operating, manufacturing, and shipping various illegal substances. It is believed they served customer sin at least three dozen US states and over two dozen countries in total. It appears some of their business was conducted on the darknet, albeit exact details have not been provided as of yet.

Read More: https://themerkle.com/bitcoin-transactions-lead-to-international-drug-trafficking-rings-arrests/

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[bryant.coleman]

More details are needed before we can comment on this news. I am not sure how the feds were able to track the Bitcoin transactions. Drug kingpins normally have tens of billions of USD worth of turnover per year, and they are not stupid to use payment methods that can be traced back to them. I am sure that the Chinese individuals in question here might have used Bitcoin mixers and other anonymity providers.

There is a good chance that they were traced when they tried to convert their BTC to cash. And this is the stage where more than 90% of the drug traffickers are caught. There are only a very few instances where the authorities actually tracked the Blockchain transactions to the individual. In most cases, the BTC to fiat conversion is the riskiest part for the criminals.

BTW, can someone confirm whether these two Chinese individuals were arrested from Ohio, or from outside the US?

[NeuroticFish]

These two Chinese drug dealers may be small fish leading to a bigger whale if the investigation is successful.

If they would have had any clue for the next step(s) in order to catch the big boys, this wouldn't have gotten out to media.
They've caught 2 small dealers and ta-dam, Bitcoin, you know?

If they would not be so stupid to bash Bitcoin, they'd keep their mouth shut and go on. Bitcoin is pseudo-anonymous and a bad move can reveal your identity. That's a fact. But the more the news about "bad guys", Bitcoin and "caught", the bigger the chance they'll use anonymous coins. And then the law will have no choice on this direction.

[hugeblack]

This article has a clear contradiction. It speaks of the fact that they are using BTC as a tool of privacy and hence out of sight of governments. On the other hand, governments are monitoring these flows.

More specifically, they are monitoring Bitcoin revenue streams.

This is a weak argument. When there is no other reason to ban something we start to create fears about it so that people avoid.
I do not know what the real ratio is, but more people are speculating than the number who use BTC for dark activities.

[1Referee]

There is a good chance that they were traced when they tried to convert their BTC to cash. And this is the stage where more than 90% of the drug traffickers are caught.

That's very likely it. Even if they haven't been caught converting to fiat directly, the entities who end up receiving these tainted coins might try to convert their coins without realizing what they have been used for, and that's how law enforcement is a step closer to the actual criminals. Bitcoin is just a horrible tool to use for practices like these.

I actually believe that law enforcement is very happy with Bitcoin being so transparent. It allows them to solve cases that with a high degree of certainty wouldn't be solved if the criminals used cash. But then again, this isn't going to work for ever with how people slowly but surely figure out that there is no such a thing as anonymity when it comes to Bitcoin.

[BitHodler]

But the more the news about "bad guys", Bitcoin and "caught", the bigger the chance they'll use anonymous coins.

That's what I thought initially, but this doesn't really seem the case. Sure, there might have been a slight uptick in use of privacy focused altcoins, but more than that definitely not.

Privacy focused altcoins might be more private than Bitcoin, but they lack the acceptance that Bitcoin has, and that by orders of magnitude. It's not easy to find someone to accept your XMR or Zcash.

An aspect that might have contributed to this is that exchanges have slowly started delisting these coins because they want to become compliant. I can't see this chance at all.

[bryant.coleman]

There is a good chance that they were traced when they tried to convert their BTC to cash. And this is the stage where more than 90% of the drug traffickers are caught.

That's very likely it. Even if they haven't been caught converting to fiat directly, the entities who end up receiving these tainted coins might try to convert their coins without realizing what they have been used for, and that's how law enforcement is a step closer to the actual criminals. Bitcoin is just a horrible tool to use for practices like these.

I actually believe that law enforcement is very happy with Bitcoin being so transparent. It allows them to solve cases that with a high degree of certainty wouldn't be solved if the criminals used cash. But then again, this isn't going to work for ever with how people slowly but surely figure out that there is no such a thing as anonymity when it comes to Bitcoin.

The law enforcement authorities are able to trace back the transactions to the users, but if the mixers are used, then that makes their task a lot more complicated. And that is one of the reasons why they are trying to close down the Bitcoin mixers (or comically, trying to make KYC mandatory for all the cryptocurrency mixers, including Chip Mixer).

If anonymous coins such as Monero, Veil and Zcash had become more popular, then the usage of Bitcoin for such shady purposes could have gone down. Unfortunately, these coins remain far less popular than Bitcoin and recently those using them have faced difficulties in either selling or buying these coins. As a result the majority of the transactions in dark markets continue to use BTC.

[jseverson]

The law enforcement authorities are able to trace back the transactions to the users, but if the mixers are used, then that makes their task a lot more complicated. And that is one of the reasons why they are trying to close down the Bitcoin mixers (or comically, trying to make KYC mandatory for all the cryptocurrency mixers, including Chip Mixer).

Do you have a source that says authorities are trying to close down mixers?

Anyway, the source itself doesn't say that their Bitcoin transactions led to their arrests, so I feel like this article is just making assumptions here. All that has been mentioned is that the suspects are known to use Bitcoin for laundering money, among many other methods. Certain addresses have been blacklisted too, though I have no idea what implications that brings.

[Kakmakr]

Do they really think that all illegal activities will seize if Bitcoin is banned? What did these drug cartels use before Bitcoin came on the scene? They used "cash" because it was also a anonymous currency and they will still use cash, because it is even more anonymous than bitcoins.

Yes, cross border payments are easier with Bitcoin payments, but it leaves a paper trail that might be followed, when the law enforcement agencies figure out how the technology can be forensically handled. 

                                                              Give them enough rope to hang themselves.

[CryptoBry]

What is so clear with this news about an event that happened last year is the proven fact that Bitcoin is not a private coin and therefore all the transactions in the network can be seen by anyone interested enough to dig and click some links. I am sure those Chinese nationals arrested and proven guilty are not educated on Bitcoin or the use of cryptocurrency and most probably they were not aware that there are actually private cryptos they can use and not Bitcoin. People who still think that Bitcoin is the way for criminals to cover their tracks probably are not informed well or maybe living in the caves for a long time.

[Schirer]

More details are needed before we can comment on this news. I am not sure how the feds were able to track the Bitcoin transactions. Drug kingpins normally have tens of billions of USD worth of turnover per year, and they are not stupid to use payment methods that can be traced back to them. I am sure that the Chinese individuals in question here might have used Bitcoin mixers and other anonymity providers.

There is a good chance that they were traced when they tried to convert their BTC to cash. And this is the stage where more than 90% of the drug traffickers are caught. There are only a very few instances where the authorities actually tracked the Blockchain transactions to the individual. In most cases, the BTC to fiat conversion is the riskiest part for the criminals.

The DarkWeb mostly works with BTC so they infact are so stupid to use traceable payments methods. You already told us and yourself where the weakest points are - mixers and fiat to btc txs. There is no way to escape that especially when working with large amounts of BTC.

[bbc.reporter]

This article has a clear contradiction. It speaks of the fact that they are using BTC as a tool of privacy and hence out of sight of governments. On the other hand, governments are monitoring these flows.

More specifically, they are monitoring Bitcoin revenue streams.

This is a weak argument. When there is no other reason to ban something we start to create fears about it so that people avoid.
I do not know what the real ratio is, but more people are speculating than the number who use BTC for dark activities.

The article mentioned bitcoin as not private nor anonymous, however, it is perceived to be. It is not the article's fault that the clear contradiction is the 2 Chinese individuals who want private transactions but used bitcoin hehehe.

[nulltxmark]

This article has a clear contradiction. It speaks of the fact that they are using BTC as a tool of privacy and hence out of sight of governments. On the other hand, governments are monitoring these flows.

More specifically, they are monitoring Bitcoin revenue streams.

This is a weak argument. When there is no other reason to ban something we start to create fears about it so that people avoid.
I do not know what the real ratio is, but more people are speculating than the number who use BTC for dark activities.

The article mentioned bitcoin as not private nor anonymous, however, it is perceived to be. It is not the article's fault that the clear contradiction is the 2 Chinese individuals who want private transactions but used bitcoin hehehe.

Bitcoin is technically "pseudoanonymous" but most people treat it like Monero for some reason...

[1Referee]

Bitcoin is technically "pseudoanonymous" but most people treat it like Monero for some reason...

That's because of how the mainstream media labels Bitcoin as THE currency to conduct transactions anonymously. In most cases it's accompanied by a lengthy article where they explain that criminals have used Bitcoin either to launder money or buy drugs and whatnot. If criminals use Bitcoin, then it surely is anonymous, right?

No one would give a damn if the mainstream media referred to XMR because people don't know what the heck that thing is. Bitcoin is known to most people as household brand.

[bbc.reporter]

@1Referee. Agreed. However, I reckon most of us thought bitcoin was anonymous when we came in here? We might also not be the last hehe.

[anoufal]

On the one hand, this is good and will help catch many more drug dealers and arms dealers, but doesn't it make crypto less decentralized?

[Lanatsa]

The law enforcement authorities are able to trace back the transactions to the users, but if the mixers are used, then that makes their task a lot more complicated. And that is one of the reasons why they are trying to close down the Bitcoin mixers (or comically, trying to make KYC mandatory for all the cryptocurrency mixers, including Chip Mixer).

Do you have a source that says authorities are trying to close down mixers?

Anyway, the source itself doesn't say that their Bitcoin transactions led to their arrests, so I feel like this article is just making assumptions here. All that has been mentioned is that the suspects are known to use Bitcoin for laundering money, among many other methods. Certain addresses have been blacklisted too, though I have no idea what implications that brings.

Providing in behalf of byrant.coleman

https://cointelegraph.com/news/cryptocurrency-mixers-and-why-governments-may-want-to-shut-them-down

They are cracking up mixers due to this reason where it do makes more hard for them to traced up tainted coins with these mixing services.
We already seen some being sampled out and some do voluntarily closes down just like Bitblender due for this reason.

As usual into these kind of incidents when in come to illegal aspect and suspect being caught.Bitcoin is always been dragged down and actually not a surprising thing.

[bbc.reporter]

@Lanatsa. I predict 2 positive effects for successful government shutdowns of all mixers. It will begin the anonymous coin revolution and it might make bitcoin unattractive for criminals which makes it more attractive for today's more skeptical investors.

[bryant.coleman]

The law enforcement authorities are able to trace back the transactions to the users, but if the mixers are used, then that makes their task a lot more complicated. And that is one of the reasons why they are trying to close down the Bitcoin mixers (or comically, trying to make KYC mandatory for all the cryptocurrency mixers, including Chip Mixer).

Do you have a source that says authorities are trying to close down mixers?

Anyway, the source itself doesn't say that their Bitcoin transactions led to their arrests, so I feel like this article is just making assumptions here. All that has been mentioned is that the suspects are known to use Bitcoin for laundering money, among many other methods. Certain addresses have been blacklisted too, though I have no idea what implications that brings.

Providing in behalf of byrant.coleman

https://cointelegraph.com/news/cryptocurrency-mixers-and-why-governments-may-want-to-shut-them-down

They are cracking up mixers due to this reason where it do makes more hard for them to traced up tainted coins with these mixing services.
We already seen some being sampled out and some do voluntarily closes down just like Bitblender due for this reason.

As usual into these kind of incidents when in come to illegal aspect and suspect being caught.Bitcoin is always been dragged down and actually not a surprising thing.

Many thanks for posting this. Apart from Bitblender, many other Bitcoin mixers are also facing the heat from the authorities. Currently the biggest Bitcoin mixer in active service (Chipmixer) is having issues with the authorities after it was established that the Binance hackers used their services to wash at least BTC5,000 of the stolen Bitcoins.

I guess the first large-scale Bitcoin mixer to close down was Bitmixer.io. At that time, they were saying that the closure is due to issue within the Bitcoin algorithm, which makes maintaining anonymity difficult. And one example of a mixer closed down by the authorities is that of Bestmixer.io. They were forcibly closed down by the Fiscale Inlichtingenen Opsporings Dienst (FIOD) of the Netherlands.

[Carlton Banks]

@nulltxmark


why are you making more than 1 thread about negative news stories?

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