Federal Task Force Seizes $34M in Crypto Forfeiture From Dark Web Marketplace Seller

Federal prosecutors have seized $34 million worth of cryptocurrency from a South Florida man, allegedly made from illicit sales online.

The forfeiture was one of the largest involving cryptocurrencies ever filed by the United States, according to a press release from the U.S. Department of Justice. According to the announcement, the suspect had made millions of dollars from over 100,000 sales of illegally obtained items and data, such as online account information, that had been hacked and traded over Dark Web marketplaces. These included account information for popular services such as HBO, Netflix, and Uber.

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The announcement also provided details about how the suspect accessed the Dark Web to then acquire the illicit information and compensation in the form of cryptocurrency. First, the suspect used a globally distributed network of computers that conceal users’ IP addresses, known as The Onion Router Network, to access the Dark Web. 

A further analysis of records revealed that the suspect then utilized tumblers to launder cryptocurrencies in a process known as chain hopping. Tumblers operate by pooling together multiple cryptocurrency transactions, then distributing them to a designated cryptocurrency wallet in random increments and at random intervals. 

According to the announcement, law enforcement agents seized various cryptocurrency wallets associated with the illegal Dark Web conduct. As part of Operation TORnado, the forfeiture action was conducted by Organized Crime Drug Enforcement Task Forces, with participation from federal agencies including the IRS-CI, FBI, DEA, Homeland Security Investigations (HSI), and U.S. Postal Inspection Service (USPIS).

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Crypto crime

As cryptocurrency usage has grown over the past year, some have taken advantage of gaps in security inherent to the developing platforms on which they are used in order to steal upwards of millions of dollars worth of funds. Last week, Ronin Network, an Ethereum-based sidechain for popular crypto game Axie Infinity, was hacked for over $620 million in ETH and USDC. Meanwhile, in the first three months of the year, decentralized finance platforms lost $1.22 billion to hackers, nearly eight times more than the $154 million lost in the first quarter of 2021.

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