In the recent yearly report from the United States Internal Revenue Service (IRS), over $3.5 Billion in cryptocurrencies were seized by the Criminal Investigation Department last year. These were all in relation to tax fraud, money laundering, and many other dark web-related crimes.
The Cyber Crime Unit (CCU) was a department created in 2015 to counteract all cyber-related crimes in the US. The department has since made many efforts to counteract criminal activities on the internet. Their trained team in open source intelligence, cryptocurrencies, and blockchains have found effective methods to regulate the proclaimed “decentralized” currencies.
The year 2020 was a big one for cyber-crimes, the CCU was forced to deal with the rise of both identity fraud and Covid fraud. The CCU of the IRS works closely with other countries’ criminal teams to gather data and capture fraudulent cyber crimes.
The report explains that it is the IRS’s job to capture as many related to the crimes as possible, but admits that the usage of cryptocurrencies has made this much more difficult. The usage of cryptocurrencies makes it much harder to “follow the money.”
Silk Road Contributes over $1 Billion to the seizures.
The CCU made a breakthrough in finding thousands of bitcoins related to the Silk Road. The coins equated to over 1 billion dollars.
One of the darknets most esteemed websites, the Silk Road, was taken down way back in 2013. Ross Ulbricht, the creator of the Silk Road, was convicted on seven different crimes including money laundering and the distribution of narcotics. However, since the investigation and the conviction barely any of the alleged cryptocurrencies had been seized.
On November 5th, 2020, the largest seizure of cryptocurrency in history took place. The CCU used a Bitcoin attribution company in order to analyze some bitcoin transactions from the Silk Road’s website data. 54 bitcoin transactions were found, and the CCU was able to determine that the proceeds were of unlawful activities.
The investigation lead the CCU and personnel to find a hacker by the pseudonym “Individual X”. The hacker had transferred the funds between 2012 and 2013. After further investigations of the hack, the CCU found several thousand Bitcoins and swiftly seized them.
Ross Ulbricht is currently serving 2 life sentences + 40 years in prison. He recently started an auction of his art in the form of an NFT.
The longest-running bitcoin money-laundering service on the darknet
On April 27th, 2021, a man by the name of Roman Sterlingov was arrested and prosecuted on multiple criminal charges related to the darknet.
“the longest-running bitcoin money-laundering service on the darknet” claims the IRS’s report.
Sterlingov launched and ran the cryptocurrency mixer site known as “Bitcoin Fog”. The site was used as a way of obscuring the destinations and sources of cryptocurrencies by mixing cryptocurrency exchanges with multiple users in one transaction. This makes cryptocurrency transactions much harder to track, and so it is one of the most valuable items to use on the darknet.
“This is yet another example of how investigators with the right tools can leverage the transparency of cryptocurrency to follow the flow of illicit funds,” says Jonathan Levin, co-founder of blockchain analysis company Chainalysis.
The US authorities captured Sterlingov at the LA International airport. Bitcoin Fog was the longest-running and most popular mixer on the darknet. The site was linked to multiple money-laundering scandals in the past few years and caused the IRS many nightmares.
The IRS claimed that the bulk of this cryptocurrency came from darknet marketplaces and was tied to illegal narcotics, computer fraud and abuse activities, and identity theft. The IRS has only taken down one other darknet mixer site and is proud to have found Sterlingov.
Other Significant Cases Mentioned
Microsoft Employee, Volodymyr Kvashuk, Sentenced to 9 Years for Stealing more then $10 Million and Using a Bitcoin Mixing Service to Hide the Proceeds
And Ukrainian Cyber Criminal, Glib Oleksandr, Extradited for Decrypting the Credentials of Thousands of Computers across the World and Selling Them on the Dark Web to Facilitate Tax Fraud, Ransomware and Other Crimes.