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Dark Web Drug Dealers Indicted for Laundering $2.3 Million in Bitcoin

Dark Web Drug Dealers Indicted for Laundering $2.3 Million in Bitcoin

Manhattan DA Indicts Dark Web Drug Dealers for Laundering $2.3 Million in BitcoinThe Manhattan DA has charged three dark web operators on multiple charges including money laundering via bitcoin. | Source: Shutterstock Get Exclusive Analysis and Investing Ideas of Future Assets on Hacked.com. Join the community today and get up to $400 in discount by using the code: “CCN+Hacked”. Sign up here. Get Exclusive Analysis and Investing Ideas of Future Assets on Hacked.com. Join the community today and get up to $400 in discount by using the code: “CCN+Hacked”. Sign up here.By CCN.com: The Manhattan District Attorney’s Office indicted three men for allegedly laundering $2.3 million in crypto by using debit cards pre-loaded with bitcoin and withdrawing large amounts of cash at ATMs in New York and New Jersey.The trio was also charged with operating bogus storefronts on the dark web that sold illegal drugs, including counterfeit Xanax tablets, the DA’s Office announced in a statement.Money-Laundering and Criminal Drug SalesChester Anderson, Jarrett Codd, and Ronald MacCarty were indicted with multiple felonies, including money-laundering, identity theft, and criminal sale of a controlled substance to buyers in 43 states.Orange buckets filled with counterfeit Xanax pills were seized in the bust, according to the Manhattan District Attorney’s office. (Photo: Manhattan DA)Counterfeit Drugs and Crypto Seized At Drug DensManhattan District Attorney Cyrus Vance said this crackdown was the largest pill seizure in New Jersey’s history.In addition to seizing thousands of dollars in bitcoin at the defendants’ drug dens, authorities seized the following:20,000 to 620,000 alprazolam tablets.500 glassines of fentanyl-laced heroin.Methamphetamine.Ketamine.Gamma hydroxybutyric acid.D.A. Warns Money Launders: ‘You Are On Notice’Authorities said the counterfeit pills, which were stored in orange buckets, had a street value of $3 million. District Attorney Cyrus Vance warned money launderers and dark web operators that the law will hunt them down.“If you are engaging in illicit activity on the dark web, you are on notice: We know how to find you. We know how to put you out of business. And we know how to hold you criminally accountable.”One Defendant Operated A Bitcoin MachineWhen mailing the counterfeit drugs to purchasers, the defendants used return addresses that falsely identified the sender as a New York City business, including multiple Manhattan law firms.One of the defendants — Ronald MacCarty — operated a bitcoin machine at his sham drug shop in Asbury Park, New Jersey. The machine converted bitcoin-loaded prepaid Visa cards into dollars.Another defendant — Chester Anderson — kept a small collection of cryptocurrency books at his New Jersey home, according to investigators.The trio launched their dark web operation in 2016. Authorities began investigating them in 2017 at the behest of an anonymous tipster.‘Operation Crypto Sweep’ Targets Con ArtistsIt’s likely that this New Jersey bust was related to Operation Crypto Sweep, a coordinated crackdown into cryptocurrency scams launched in 2018 by U.S. and Canadian regulators.As CCN reported in May 2018, the North American Securities Administrators Association (NASAA) sent over 70 cease-and-desist letters to operators of sham crypto companies in more than 40 jurisdictions across the United States and Canada.‘Operation Crypto Sweep’: US and Canada Investigate 70 Cryptocurrency, ICO Scams https://t.co/nXUo1xDHv5— Real Time Crypto (@RealTimeCrypto) May 22, 2018NASAA president Joseph Borg said one of the goals of Operation Crypto Sweep is to raise public awareness of the predatory scam artists preying in the unregulated cryptocurrency market.“Crypto-criminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams,” Borg said.Operation Crypto Sweep came shortly after a finding that fraud is alarmingly widespread among crypto investment promoters, according to a report by the Texas State Securities Board. Texas leads the United States in cryptocurrency crackdowns.https://t.co/CMcNHFmWHF— iShook (@ishookinc) April 11, 2018Goldman Sachs: We Never Planned to Launch Crypto Trading DeskThese and other bitcoin scandals could be part of the reason why investment bank Goldman Sachs backpedaled on opening a crypto trading desk.Last week, CEO David Solomon insisted that Goldman Sachs never had any plans to launch a crypto trading desk, despite rumors to the contrary.“We never had plans to open a cryptocurrency desk.”Goldman Sachs CEO Kills the Rumor: ‘We Never Had Plans to Open a Crypto Desk’ https://t.co/8UIFEmDN9E— CCN.com (@CCNMarkets) April 12, 2019 About The AuthorSamantha ChangSamantha Chang is a financial editor who writes about politics at BizPac Review, about business at CCN, and general news at HVY. She is a law school graduate and an alum of the University of Pennsylvania who enjoys finance, flowers, and fitness. You can find her on Twitter at Samantha_Chang.
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US Govt. Seizes Millions in Cash & Crypto in Movie Piracy Case

The United States Government has seized millions in cash and cryptocurrency as part of a movie and TV show piracy investigation carried out by Homeland Security Investigations and the MPAA. PayPal appears to have played an early key role by providing information on two subscription-based ‘pirate’ sites. From there, the rabbit hole deepened. Significant legal…

US Govt. Seizes Millions in Cash & Crypto in Movie Piracy Case

The United States Government has seized millions in cash and cryptocurrency as part of a movie and TV show piracy investigation carried out by Homeland Security Investigations and the MPAA. PayPal appears to have played an early key role by providing information on two subscription-based ‘pirate’ sites. From there, the rabbit hole deepened.

Significant legal action against alleged operators of pirate sites have traditionally been carried out with great fanfare.

However, a case underway in federal court in Oregon is a very different beast, particularly given its scale and form.

The case filed in the district court May 6, 2019, reveals the United States government seeking forfeiture of around $4 million dollars worth of cash and cryptocurrency seized on the basis that the owner of the property was involved in a conspiracy to commit copyright infringement and money laundering.

The investigation reportedly began in October 2013 when Homeland Security Investigations (HSI) agents received information from PayPal concerning two websites, Noobroom.com and Noobroom7.com, that allowed subscribers to stream movies and TV shows.

HSI reported these sites to the MPAA which conducted an investigation, concluding that the sites and associated domains Noobroom and Noobroom9 distributed works in breach of its members’ copyrights. Revenue was reportedly generated by subscriptions processed through Stripe and via adverts placed by a company called Lanista Concepts.

In July 2014, the MPAA sent a cease-and-desist notice to Noobroom. Five days later a covert Noobroom user account operated by the Hollywood group received a message advising users that their accounts had been moved to a new website at SuperChillin.com.

After downloading movies from SuperChillin, the MPAA was able to link an IP address to an individual identified as Talon White. The suspect was subsequently linked to two additional sites – movietv.co and Sit2Play.com – which were deemed to be near identical copies of each other. The registrant of Sit2Play was listed as Talon White and an associated email address was determined as belonging to him.

HSI’s investigation continued from 2016 to November 2018 when search and seizure warrants were executed. A declaration by Keith Druffel, a Special Agent of the Internal Revenue Service – Criminal Investigations, reads as follows;

“Based on financial records obtained during the investigation, I determined that White received substantial revenue from the above-listed websites,” Druffel writes.

“In 2018, he was averaging revenue over $500,000 per month. In 2017, White received over $2.2 million. In 2016, White received over $1 million in revenue, and in 2014 and 2015, White received on average about $400,000 a year in revenue.”

According to Druffel, subscribers of the sites paid via PayPal or Stripe, payments that were deposited into bank accounts controlled by White. Information provided by Stripe matched White’s personal information and the account was labeled as “Selling stock tip subscriptions via email.” The IRS claims there is no evidence of any such sales.

78,985 payments of $9.99 were received into the Stripe account between October 2015 and December 2016, amounting to $789,060. A further 7,611 payments of $25.49 ($194,004.39) and 5,348 payments of $44.99 ($240,606.52) made a grand total of $1,223,671.24.

“The above-listed amounts correspond to the listed subscription costs on Sit2Play and Movietv. Therefore, I believe the payments received by Stripe are the subscription fees for the websites,” Druffel adds.

Further analysis of transactions on White’s Stripe account dated between October 2017 and September 2018 revealed a further 396,843 payments of between $9.99 and $44.99 to a value of $6,373,816.57.

“The above listed amounts correspond to the cost of subscriptions to the websites and represent proceeds from the violation of 18 USC § 2319, Criminal Copyright Infringement,” the statement reads.

The investigation found that through August 2018, more than $3m was transferred from the Stripe account to a Wells Fargo account in White’s name and a JP Morgan Chase account held in the name of Viral Sensations, Inc. (VSI), a Nevada entity.

White is alleged to have opened three checking accounts in the name of VSI, over which he had sole signature authority. Through August 31, 2018, one VSI account received payments of more than $5.9 million. The accounts were linked to White and subscriptions from the pirate sites. Funds from one of the Chase accounts were used to buy $1m in cryptocurrency through virtual currency exchange Coinbase.

On November 13, 2018, Mustafa Kasubhai, United States Magistrate Judge for the District of Oregon, approved a search and seizure warrant authorizing a search of White’s residence and seizure of various assets. The warrant was executed two days later, yielding the following;

  • $2,457,790.72 seized from JPMorgan Chase Bank account #1
  • $1,266,650.00 seized from JPMorgan Chase Bank account #2
  • $1,383.68 seized from JPMorgan Chase Bank account #3
  • $200,653.71 seized from JPMorgan Chase Bank account #4
  • $32,921.00 seized in US currency (cash)
  • $1,940.77 seized in US currency (Stripe account)
  • 31.53810677 in BTC (Coinbase account)
  • 1,022.39066800 in ETH (Coinbase account)
  • 5.74017141 in BCH (Coinbase account)

“[I] have probable cause to believe, and I do believe, that White and others known and unknown were involved in a conspiracy to commit copyright infringement and money laundering, in violation of 18 U.S.C. §§ 1957 and 2319 from at least 2013 through November 2018,” Druffel’s statement adds.

On May 7, 2019, District Judge Anna J. Brown issued an order to the IRS to hold the assets until further notice.

“You are hereby commanded to arrest and take into your possession until further order of the Court, defendants, in rem, Assorted Funds,” the Judge wrote.

From a copyright infringement perspective, this case is pretty unusual.

Most civil and criminal cases against pirate sites and their operators involve detailed descriptions of their workings along with finely-tuned claims of various types of infringement. But the focus here appears to be a financial one, for now at least.

A report from Koin.com suggests that the man hasn’t been charged with a crime yet. In an effort to find ou more, TF approached White’s lawyer Rain Minns. At the time of publication we were yet to receive a response.

Related court documents obtained by TF can be found here (1,2,3)

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Register Lecture: Hidden heroes of Alan Turing’s Enigma

Live code-breaking and beer A curse follows Enigma, the cryptography device deployed by Adolf Hitler’s military during the WWII to protect their Morse communications from the Allies. That curse? Invisibility. Alan Turing has – now – become intrinsically linked with cracking Enigma, a machine of fiendish complexity capable of 159 million, million, million (1.59×1020) settings…

Register Lecture: Hidden heroes of Alan Turing’s Enigma

Live code-breaking and beer

A curse follows Enigma, the cryptography device deployed by Adolf Hitler’s military during the WWII to protect their Morse communications from the Allies. That curse? Invisibility.

Alan Turing has – now – become intrinsically linked with cracking Enigma, a machine of fiendish complexity capable of 159 million, million, million (1.59×1020) settings that demanded the perfect marriage of mathematics and engineering to break. Turing’s work would blow open secrets that helped alter the war – for example, alerting the RAF to Luftwaffe raids during the Battle of Britain. And yet, Turing received little by way of the recognition he deserved for decades – quite the opposite, in fact.

But Turing is not the only one to have suffered Enigma’s curse of invisibility. Join The National Museum of Computing on June 26 for a special Register lecture journey back 80 years to the eve of the Second World War, to hear the stories of those behind Turing.

Hear about who provided a critical leg-up to the struggling English in cracking Enigma and who helped build the Bombe – the device to mechanise the mathematics of code breaking. Eight decades after the start of the War, TNMOC will go inside the pioneering work of the Polish General Staff Cipher Bureau in Warsaw and shine a light on the roles of Gordon Welchman and Doc Keen, the long-overlooked Bombe engineering team lead, at Bletchley. Together, they helped put code-breaking at Bletchley Park on an industrial footing.

Your guide for this crypto history trip will be Paul Kellar MBE, a leading member of the Bombe Rebuild project – based at TNMOC as a working tribute to those who contributed to breaking the Enigma.

Starring with Paul will be a working Enigma to help demonstrate “knowing your enemy” and illustrate how the Bombe could attack and break the Enigma on a daily basis. You will get the opportunity, too, to participate in a live code-cracking exercise with Checking Machine – the last stage in recovering the Key of the Day after the Bombe had found the crucial settings.

Join fellow Reg readers with the TNMOC crypto historians and their machines at the Rugby Tavern, 19 Great James St, London, WC1N 3ES. Doors open at 18:30 BST with Paul taking the mic at 19:00. An audience question-and-answer session will follow a break to re-charge mind and grey matter. Get your ticket here. ®

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