Dark Web Drug Dealer Indicted for Laundering $137 Million in Bitcoin From Prison

[Leviathan.007]

A Maryland-based dark web drug dealer known as Xanaxman has been charged by a Maryland federal court with embezzling $ 137 million in bitcoin from prison.
Xanaxman, originally named Ryan Farace, was jailed three years ago for selling Alprazolam, an anxiolytic drug on the Dark Web.
In November 2018, the court ordered Farace to confiscate 4,000 bitcoins obtained from the sale of drugs. That bitcoin was worth $ 16,800 at the time. But today it is worth $ 187.2 million. He was also ordered to hand over $ 5.6 million in cash and property.
Farace continued money laundering while serving a 57-month prison sentence, according to a federal indictment that was overturned by a court on Wednesday.
The indictment alleges that Farace, with the help of his father Joseph Farace, laundered money through drugs between October 2019 to April 2021.
In connection with these allegations, the Drug Enforcement Administration seized 2,875 bitcoins in February and another batch of 59 bitcoins in May, the value of which is 137 million today. Is the dollar.
Although the indictment alleges proceeds from drug trafficking, it is unclear whether these were bitcoin assets that the government did not previously know about or bitcoin that it somehow obtained in prison.

Dark web and crypto
Reliable data about the dark web, let alone the use of crypto on the dark web, is difficult to obtain. In one attempt, blockchain analytics firm Chainalysis estimated that over $800 million in cryptocurrencies was sent to dark web markets in 2019.
The Silk Road, a marketplace popular for buying illicit drugs on the dark web, was forced to shut down by the FBI in 2013. The agency seized 173,991 Bitcoin (worth $33.6 million at the time), but there’s still 444,000 Bitcoin missing; 70,000 Bitcoin that mysteriously moved in November 2020, was part of that batch, according to blockchain analytics firm Elliptic.
The US government auctions seized Bitcoin, often at a premium. In 2014, venture capitalist Tim Draper acquired 30,000 Bitcoin confiscated from the Silk Road at an undisclosed price.


Source: https://decrypt.co/78585/dark-web-drug-dealer-indicted-for-laundering-137-million-in-bitcoin-from-prison

[ccFOUND]

It is the dark side of crypto which prints bad impression on the minds of people about crypto. It is not that crypto is bad, but the intentions of some people to conduct dark things with it make it look bad in the eyes of both, general public and regulatory bodies and then, they all give bad reviews about crypto to governments which then turns down to bans or blockages by stopping people dealing in crypto. We need more secure environment which could help crypto users utilise its advantages to its peak but won't be allowed to do anything wrong with the powers in their hands.

[ChrisPop]

It's weird how they can lead this kind of operations from inside a prison. That's a clue that the prison system in functioning properly. That's government fault and it should be corrected.

The thing is this kind of news portrait the wrong image about crypto for the general public. The news piece is also pretty abstract. We don't have exact details on how it used Bitcoin inside the prison.

[mk4]

Laundering money and continuing drug activity while in prison isn't anything new though, and is definitely not exclusive to Bitcoin. Drug kingpins have done this since forever; and it's not like the drug dealer has a computer in prison to do the laundering.

[slaman29]

So of course, instead of the bigger picture that US prisons still provide a fertile breeding ground for crime and has also for decades been known for facilitation or such types of organized crime, Bitcoin is still the main feature here.

He simply chose a method of payment. If he had used credit cards or the banks, it wouldn't have been mentioned.

[o48o]

I wonder how he tried to wash this money. I mean it raises some serious eyebrows when you start to buy properties with some shady income that you probably aren't even paying taxes for. Someone should write a manual on "how to wash money properly" for criminals .

[Yogee]

...If he had used credit cards or the banks, it wouldn't have been mentioned.

Don't act as if the article was written to attack crypto. This news would still come out but not on crypto related sites.

I wonder how he tried to wash this money.

There are many establishments out there that are not legally operating even if they were registered in the US. There are also many people who would be willing to use their accounts as dummy or sell their personal information not knowing how it will be used.

[Kong Hey Pakboy]

If there is no Bitcoin, can they stop them from doing these criminal things?
Bitcoin is just a means, not the cause of crime.

It will be much harder for both if say the laundering medium used is fiat. It's harder for the law enforcement since fiat isn't traceable unless a big amount of money suddenly enters into the account of someone that doesn't have any kind of that bank activity, and it's hard for the launderers since you can't easily inject the money in a business or someone's bank account, it needs to look normal and at the same time efficient. It's a good thing that drug dealers and launderers use bitcoin because it's much easy for the cyber police to track them down via the public ledger, if it was XMR or other privacy coins, it's.going to be a win for the launderers.

[DaveF]

I am guessing neither he or his dad ever watched one of those TV shows where they follow the lives of people in prisons.

You now the ones where they show where your phone calls are monitored and recorded, your mail is read, your computer use (if any is granted) is monitored, etc.

Without getting into the drug laws are good / bad thing, if you are in prison stop breaking the law for a bit.

This really sounds like pure greed without planning.

I hate to say it, but it all goes back to "Look how they got Capone" not on the bootlegging, not on the murders, but on the taxes and financial crimes. Due your time, get out, run the money through some banks, pay your taxes and keep a low profile. Hate to say it, but in the end most^* criminals that get caught are lazy and greedy. The ones that run what look like legitimate businesses, do their books 'properly', pay their taxes and don't go nuts with spending are the ones we never hear about because they never get caught.

^*Yes there are many exceptions, but for the most part you read about them long after they have gotten away with it.

-Dave

[rikybrosh]

It is so sad to see many people still relates bitcoin with crimes. There are only some people who did that but the whole cryptocurrency community get the bad impact too, it's make governments hard to accept bitcoin. I hope the number of criminal activity which use bitcoin will decrease in the future. I think using bitcoin for crime is not mean that it can stop law enforcement to do their job.

[bryant.coleman]

LOL.. it looks like the dark market admins are always one step ahead of the FBI guys. Silk Road went down in 2014, and the FBI seized a considerable amount of the coins escrowed there. But now they are saying that they don't control 75% of those coins. And now Ross Ulbricht also doesn't have a reason to help them, since he was handed down a very unfair prison sentence. The FBI may arrest one or two dark web masterminds every now and then. But as long as the demand exists, new ones will appear in the horizon.

[NathanielParker]

This may also be part of the reason why other countries ban encryption. This payment method makes the government powerless. This is a feature of Bitcoin and a way for people to take advantage of it. The illegal transaction through Bitcoin reduces the positive impact of Bitcoin. It is not the first time that cryptocurrency is used by criminals to launder money. It is not surprising. I am just curious that a drug dealer who was in prison three years ago can continue to launder money during his 57-month sentence. It makes me curious how smart he is.

[slaman29]

...If he had used credit cards or the banks, it wouldn't have been mentioned.

Don't act as if the article was written to attack crypto. This news would still come out but not on crypto related sites.

Don't read what isn't between the lines. I didn't say the news wouldn't have been published but the credit card or bank accounts being used (if they had, instead of Bitcoin) wouldn't have been worth mentioning in the headlines.

No need to act, and no need to police the actors;)

[perryxi2]

this is a bad aspect of technological development, technological progress makes people progress but then it comes with a corollary that criminals will start taking advantage of vulnerabilities and money laundering becomes legal money, anything can happen with good sides and bad sides and I'm not surprised about money launderers like this.

[andulolika]

In November 2018, the court ordered Farace to confiscate 4,000 bitcoins obtained from the sale of drugs. That bitcoin was worth $ 16,800 at the time. But today it is worth $ 187.2 million.

[bakasabo]

It's weird how they can lead this kind of operations from inside a prison. That's a clue that the prison system in functioning properly. That's government fault and it should be corrected.

Nothing weird about that situation. Xanaxman was only the conductor, and all the operations and crimes were performed by his accomplices. And it is not a secret that prisoners can buy phones or even smartphones. Sometimes the guards even sell them to them.
I think that he simply gave secret orders when someone visits him, and the crime was just added to his crime list. This is the same as Al Capone thugs robs someone and everyone talks that "it was done by Al Capone".

[bryant.coleman]

Nothing weird about that situation. Xanaxman was only the conductor, and all the operations and crimes were performed by his accomplices. And it is not a secret that prisoners can buy phones or even smartphones. Sometimes the guards even sell them to them.
I think that he simply gave secret orders when someone visits him, and the crime was just added to his crime list. This is the same as Al Capone thugs robs someone and everyone talks that "it was done by Al Capone".

That may be possible in the third world nations, but definitely not in the United States. Xanaxman (Ryan Farace) is currently serving a 5-year sentence in one of the most secure federal prisons in the United States. If he was in some state or county prison, then I would have agreed that there was a minute chance of this happening. You have no idea about federal prisons, if you claim that prisoners can get smartphones inside their cells. From what I heard, his father laundered the coins for him.

[Kittygalore]

I think this is nothing new related to drug money laundering by buying bitcoin and this has happened very often not only with drug money but also a lot of money with other crimes committed to buy bitcoin on the stock market, of course every country has its own their respective officers to uphold justice or to apprehend the perpetrators of crime, let alone the proceeds to buy bitcoins

Of course it's nothing new, people have been using that ever since, I mean that's how I've learned of bitcoin, through watching YouTube videos about different topics like this one. Also, there's more ways to launder money now, this person is just sloppy so he got caught, one is caught but another two has slipped by.

[bakasabo]

That may be possible in the third world nations, but definitely not in the United States. Xanaxman (Ryan Farace) is currently serving a 5-year sentence in one of the most secure federal prisons in the United States. If he was in some state or county prison, then I would have agreed that there was a minute chance of this happening. You have no idea about federal prisons, if you claim that prisoners can get smartphones inside their cells. From what I heard, his father laundered the coins for him.

The whole story might be fake, but I have watched some interviews on YouTube (it is on Russian, but you can switch on subs if you want) with Russian hackers (badb for example), that served sentence in US and they said it is possible to get a smartphone in fed prisons. It cost about $5k per phone. Especially it is easy if there are a lot of Italians in the prison, because they have their men everywhere and have a lot of money.
I have a strong believe, that if a prisoner have a lot of money, and with a current level of corruption, it is possible to get everything in cell.

[Lily Garver]

Everything has two sides. Bitcoin money laundering does give some drug dealers the opportunity to launder money, but if a certain country destroys the source of the drug and directly cuts off the planting base of the drug, can it still launder money?
Even without Bitcoin, money laundering still exists.