Operation Dark Gold – arrest of 35 darknet vendors using digital currencies for illegal drug trafficking and commerce

By Christine Duhaime | July 5th, 2018

The US Department of Justice, Homeland Security Investigations (HSI), the Secret Service, and the DEA  announced the arrest and pending prosecution of more than 35 darknet vendors across the country after a year-long investigation dubbed Operation Dark Gold. US federal law enforcement seized more than $20 million in Bitcoin and other digital currencies, 100 illegal weapons including firearms, loaded shot guns, assault rifles and a grenade launcher, and drugs including 100 grams of fentanyl from darknet vendors.

Under Operation Dark Gold, the HSI infiltrated and took over the darknet account of a vendor known to launder proceeds of crime and pretended to be a vendor to lure in criminals to provide money laundering services to drug traffickers through illicit digital currency exchange services which allowed criminals to convert digital currencies to cash. As noted by law enforcement, criminals need to cash out and the only way to identify them and to protect the financial system is to work with the digital currency exchange ecosystem.

According to the US Secret Service, money laundering using digital currencies is one of the largest threats to the US financial system. Over 70% of investigations of darknet operations by HSI involve serious criminality and 15% involve child trafficking, according to the HSI.

The darknet vendors are alleged to have operated on Silk Road 2, the Quebec-based AlphaBay (although Canadian, taken down by US authorities) and HANSA (taken down by the Dutch authorities). Before vendors were arrested, much of their Bitcoin holdings were seized pursuant to demands made to digital currency exchanges to freeze and stop the movement of proceeds of crime.

You can watch the DoJ press conference below. Many of the indictments are sealed or are being released in redacted form because the investigations are ongoing internationally.

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