Last week, the U.S. Attorney for the Southern District of New York announced charges against two Bitcoin exchangers for large-scale money laundering associated with the Silk Road trafficking website. While we already blogged about Bitcoin’s increasing attractivity for money laundering, the U.S. Attorney’s press release continued a number of reports on successful law enforcement operations utilizing the virtual currency. The most prominent ones include the very first Bitcoin seizure by the U.S. Drug Enforcement Administration (DEA) last April, as well as the record seizure following the take-down of the Silk Road platform half a year later in October 2013.
Yet, according to my observation, what has stayed in the shadow of these landmark cases is that law enforcement agencies on both sides of the Atlantic have added Bitcoin to their tool box and made it part of their undercover operations. The following five cases exemplify how law enforcement agencies of different countries have successfully worked with virtual currencies to combat cyber crime:
- In its October press release on the Bitcoin seizure related to the Silk Road investigation, the DEA mentioned that “[f]rom November 2011 to September 2013, law enforcement agents made more than 100 individual undercover purchases of controlled substances from Silk Road vendors[,]” implying the utilization of Bitcoin (as it was the only way to purchase merchandise on the illicit website).
- Investigations against the operator of “fakeplastic.net”, a distributor of counterfeit credit and debit cards, included a controlled buy of such products using virtual currency in July and October 2013, according to the complaint filed at the U.S. District Court of New Jersey.
- In November 2013, another undercover operation utilized Bitcoin to purchase a deadly toxin from a Silk Road like website, resulting in the arrest of a suspect in Florida two weeks ago. The complaint filed at the U.S. District Court of New Jersey provides a detailed account of the respective transactions.
- Earlier this month, the director of the French custom’s intelligence and investigations branch informed a parliamentary committee about the country’s first-ever use of a virtual currency for a controlled buy. With an on-/offline sting operation, his “Cyberdouane” unit purchased illegal drugs with Bitcoin.
- Also in January, the district attorney’s office in Amsterdam/Netherlands, announced the use of Bitcoin by a Dutch undercover officer to purchase a firearm from a man, who was subsequently arrested in the U.S.
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